US equities fell on Thursday, as initially buoyant stocks came off on the back of falls by utilities and a budgetary shock for the healthcare sector.
The top tickers failed to hold on to a second day of gains as momentum sparked by the Federal Reserve’s pledge of a dovish rate outlook for 2017 faded.
The S&P 500 closed down 0.2% at 2381 and led by Biogen Inc (NASDAQ:BIIB) down 4.8% to $278.50. Apart from being swept up in a healthcare scare, the stock was downgraded by two brokers.
The sell-off came as an outline of President Donald Trump’s budget plan included a proposal to cut Health and Human Services (HHS) spending by 18% or about $15bn, including a $5.8bn cut from the National Institute of Health (NIH). However, it spared some of the more controversial aspects of the budget, like Obama’s Medicare.
The S&P Midcap 400 ended 0.06% lower at 1728 and led by United Therapeutic (NASDAQ:UTHR) down 4.7% to $139.11 as it too was caught up in the healthcare jitters.
Oil stocks also felt the downside on renewed worries about a global oil supply glut.
The S&P Smallcap 600 ended up 0.3% - the standout outperformer – at 844 and led by Adeptus Health Inc (NASDAQ:ADPT) up 13.2% at $1.72 after its stock was pulped by a third mid-week.
Mid-session
US stocks reversed their initial gains on Thursday as energy shares fell in tandem with oil prices and healthcare stocks came under pressure after the Trump Administration revealed plans to cut back health spend in his executive budget plan.
The S&P 500 market bellwether fell 0.1% to 2,382 — with the energy sector down 0.8%. The Dow Jones Industrial Average was trading 0.04% lower at 20,942, while the Nasdaq Composite dropped 0.03% to 5,897.
Oil prices switched direction and headed south as investors fretted about the effect that higher US production would have on OPEC’s efforts to rebalance the oil market. The West Texas Intermediate, the US crude benchmark, fell but was last rebalancing itself on a pendulum ride, flat at $48.88 a barrel.
The S&P 500 was also weighed down by the retreat in healthcare stocks. The sector was the day’s biggest loser, notching a 1.1% decline.
One big loser was Biogen (NASDAQ:BIIB) whose shares fell more than 5% $276.75 after analysts at Morgan Stanley and Leerink downgraded the stock. It was also the top faller on the S&P 500.
Illumina (NASDAQ:ILMN) and Amgen (NASDAQ:AMGN) shares also figured among the top 10 worst performers on the S&P 500, down 4% to $159.31 and down 2% to $178.90 respectively.
The sell-off came as an outline of President Donald Trump’s budget plan included a proposal to cut Health and Human Services (HHS) spending by 18% or about $15bn, including a $5.8bn cut from the National Institute of Health (NIH). However, it spared some of the more controversial aspects of the budget, like Obama’s Medicare.
The top gainer on the S&P 500 was Oracle Corp (NYSE:ORCL) up 6.6% to $45.88 after it beat third-quarter earnings estimates.
The S&P Midcap 400 was flat at 1729 while the S&P Smallcap 600 edged 0.3% higher to 844 and led by Adeptus Health Inc (NYSE:ADPT) up 11.8% to $1.70. Midweek the stock lost more than one-third of its value.
Pre-Open
US stocks are set to open higher on Thursday, still fuelled by expectations of a tamer rate hike outlook in 2017 after the Fed raised interest rates, as epected, the previous day.
The S&P 500, Dow and Nasdaq are all indicated up 0.2%.
Markets will also be bupyed by news that the Philly Fed manufacturing index for March recorded32.8 versus a forecast 30.0. However, it was still a dive from 43.3 in February.
Although considered a sideshow by some US investors, the resounding vote for status quo in the Dutch elections also helped to buttress Wall Street indicators after buoying European bourses overnight.
In the Netherlands, voters turned out in droves to support current Prime Minister Mark Rutte, who was running against far-right candidate Geert Wilders.
With 94.3% of votes counted, Rutte's VVD was projected to win 33 seats compared to 20 for Wilders' PVV.
However, Wilders’ populist opposition has mustered sufficient support to give France a wobble ahead of the May elections there. Wilders was not tipped to overturn the government majority.
Parka maker Canada Goose is set to debut on the New York Stock Exchange and Toronto Stock Exchange on Thursday morning. Shares will be trading under the ticker symbol " NYSE:GOOS."