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Michael George Haddad
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A new milestone. the
Dow Jones Industrial Average
and
S & P 500
both closed above. The Dow surpassed the 27,000 mark for the first time thanks to the help of health funds. the
Nasdaq Composite,
on the other hand, ended the day slightly below the breakeven point. The data show that consumer prices rose more than expected in June, but markets continue to forecast interest rate cuts in July after Federal Reserve Chairman Jerome Powell's statement to Congress. Today After the bell, we …
- check the Dow's run from 26,000 to 27,000;
- review the latest inflation data and their implications for changing interest rates;
- and explain why the shares of pharmacy-profit directors rose 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 index rose 6.84 points, or 0.23% , to also reach a new record, at 2,999.91. The Nasdaq Composite lost 6.49 points, or 0.08%, to 8,196.04 points.
The Dow broke the 27,000 mark for the first time in its history. It took 372 trading days for the index to reach its target, as it had reached the last 1,000-point milestone on January 26, 2018, at 26,000. The index was driven primarily by
UnitedHealth Group
(ticker: UNH),
Visa
(V)
Microsoft
(M
SFT)
McDonalds
(MCD), and
Walt Disney
(DIS), while 3M (MMM),
Goldman Sachs
(GS), and Caterpillar (CAT) were the biggest streaks.
In comparison, it took only eight trading days for the Dow to grow from 25,000 to 26,000, making the new milestone less important given the gloom of the year. "Of course, 27,000 is just a number and, overall, it does not make sense," said Ryan Detrick of LPL Financial on Thursday. "What it is, however, reminds all investors that this bull market has ignored all scary titles for years and the dual benefit of fiscal and monetary policy could mean that it has much more time to do that planned.
The consumer price index (CPI) rose 0.1% in June from the previous month, while the core CPI rose 0.3%, its highest level in 15 months. Both have exceeded the expectations of economists.
"The June CPI report highlighted the fact that there was no credible deflationary pressure on the US economy and that almost all of the weakness in the US 39, the consumer price index could be attributed to the sharp fall in energy prices that occurred last fall, "wrote Michael Shaoul of Marketfield Asset Management.
This means that there is no obvious need for monetary policy change, wrote Shaoul. Given that low oil prices have been mainly driven by supply, declining interest rates could even encourage increased production by US firms and continue to drive down prices. But with the inflationary pressures also eased, there is also no obvious benefit for a "reduction of insurance" in July, Shaoul wrote. A deeper reduction of 50 basis points, however, seems much more dubious, he noted.
Pharmaceutical-benefit executives saw their shares climb on Thursday after the Trump administration acknowledged that it was abandoning a potentially industry-friendly plan that would have resulted in lower prices at the pharmacy counter. . The health insurance giant UnitedHealth Group saw its shares jump 5.5%.
Pharmaceutical benefit directors, or PBMs, act as intermediaries between pharmaceutical companies and insurance plans. They often negotiate discounted prices for their insurance customers in the form of discounts and retain a portion of these profits for themselves.
The now-dead plan, one of the most decisive elements in the Trump administration's efforts to reduce the price of drugs, would have forced benefit managers working with Medicare and Medicaid to eliminate the discounts and transfer them directly to patients . This would have been bad news for project managers as they had to find a different way to generate revenue.
The shares of PBMs, pharmacies and drug distributors have all been depressed by investor anxiety for the future profits of the industry. Now the drug industry has finally taken a break, for now.
Abandoning rebates could mean that the Trump administration will look more aggressively at other proposals still on the table. Already, the shares of pharmaceutical companies are falling today, investors fearing that the war led by the Trump administration to curb the price of drugs is only warming up.
Write to Evie Liu at [email protected]
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