A new milestone the
Dow Jones Industrial Average
S & P 500
both closed higher. The Dow reached the 27,000 mark for the first time, with the help of health care actions. the
On the other hand, the day ended slightly below the equilibrium line. The data showed that consumer prices rose more than expected in June, but markets continue to expect a cut in interest rates in July after testimony before Congress of Federal Reserve Chairman Jerome Powell. On this day. After the bell, we…
- verify the Dow's trip from 26,000 to 27,000;
- look at the latest inflation data and its implications for the course of interest rates;
- and explain why the actions of pharmaceutical benefit managers gained momentum on Thursday.
Above 27,000 now
The Dow Jones Industrial Average added 227.88 points, or 0.85%, to close at 27,088.08, while the S & P 500 rose 6.84 points, or 0.23%, to also reach a new record, at 2,999.91. The Nasdaq Composite fell 6.49 points, or 0.08%, to 8,196.04.
The Dow closed above 27,000 points for the first time. It took the index 372 business days to reach the mark since it reached its last milestone of 1,000 points in 26,000 on January 17, 2018. The index was driven primarily by
McDonald & # 39; s
(DIS), while 3M (MMM),
(GS) and Caterpillar (CAT) were the biggest drag.
In comparison, it only took eight business days for the Dow to go from 25,000 to 26,000, which makes the new milestone look less significant, considering how difficult the year has been. "Sure, 27,000 is just a number and in the whole field of things it does not make sense," wrote Ryan Detrick of LPL Financial on Thursday. "What is a reminder to all investors that this bull market has ignored all the" holders of fear for years and the double benefit of fiscal and monetary policy could mean that it has much longer than most expected " .
The general consumer price index (CPI) rose 0.1% in June compared to the previous month, while the core CPI rose 0.3%, its highest reading in 15 months. Both exceeded the expectations of economists.
"The June CPI report emphasized the fact that there are no credible deflationary pressures acting on the US economy, and that almost all the weakness in the overall CPI is due to the sharp fall in the prices of the economy. energy that took place last fall, "wrote Michael Shaoul of Asset Management in the market.
That means there is no obvious need for a change in monetary policy, Shaoul wrote. Since lower oil prices have been driven mainly by supply, lower interest rates could even stimulate higher output from US companies and keep prices lower. But with inflationary pressures also muted, there is also no obvious drawback to an "insurance cut" in July, Shaoul wrote. However, a deeper cut of 50 basis points seems much more doubtful, he said.
Pharmaceutical benefits managers saw their shares rise on Thursday after the Trump administration acknowledged that it is moving away from a potentially imminent plan for the industry that would have cut prices at the pharmacy counter. Health insurance giant UnitedHealth Group saw its shares rise 5.5%.
Pharmacy benefit managers, or PBMs, work as intermediaries between pharmaceutical companies and insurance plans. They often negotiate discount prices for their insurance customers in the form of discounts and keep some of those benefits.
The now dead plan, one of the most radical elements of the Trump administration's effort to reduce drug prices, would have required benefit managers working with Medicare and Medicaid to eliminate reimbursements and transmit those benefits directly to patients. . That would have been bad news for PBMs, since they would have to find a different way to generate income.
The actions of PBM, pharmacies and drug distributors have been depressed, as investors worry about the future benefits of the industry. Now the drug industry finally took a break, for now.
Giving up on discounts could mean that the Trump administration will more aggressively analyze other proposals that are still on the table. Already, stocks of pharmaceutical companies are falling today because investors are worried that the Trump administration's war to control drug prices is heating up.
Write to Evie Liu at firstname.lastname@example.org