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Stock Market News for Jul 12, 2019

Zacks Equity Research

The Dow and S&P 500 closed at record highs on Thursday riding a rally among healthcare shares and Fed’s indication of an easier monetary policy. Healthcare shares especially gained after the Trump administration abandoned a proposal to lower medicine costs. Investor expectations also grew of an imminent rate cut after Fed Chairman Jerome Powell cited trade uncertainties taking a toll on global economic outlook. Nasdaq, however, closed lower. 

The Dow Jones Industrial Average (DJI) gained 0.85% on Jul 11 to close at 27,088.08, while the S&P 500 added 0.23% to finish at 2,999.91. The Nasdaq Composite Index shed 0.08% to close at 8,196.04. Decliners outnumbered advancers on the NYSE by a 1.19-to-1 ratio.

White House Scrapped Proposal to Lower Drug Prices

On Jul 11, the Trump administration dropped an ambitious proposal to decrease prescription medicine prices. Per the proposal, rebates from government drug plans would have been eliminated. This means that health insurers would have barred from receiving rebates from drug companies to Medicare patients.

However, since the proposal was dumped, it allowed shares of companies such as CVS Health Corporation CVS to gain on Thursday. These companies bargain rebates with drug-making companies on behalf of the government’s Medicare program. These companies can thus benefit from the discounts. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Chances of a Fed Rate Cut are High This Month

Powell’s two-day testimony on monetary policy to the Congress hinted at a possible slashing of Fed rates during the FOMC meeting scheduled for July 30-31. The Fed Chair said that the central bank will “act as appropriate” in order to sustain expansion.

Powell also noted that business investment had slowed down considerably. Uncertainty around trade policies and concerns over the strength of global economy pressed heavily on the U.S. economic outlook. Lagging inflation was also cited as a reason to ease monetary policy.

Economic Data

According to the Bureau of Labor Statistics, Consumer Price Index increased 0.1% in June. The all items index increased 1.6% on an annual basis. The Core CPI, which is CPI minus food and energy, rose 0.3% last month.

Initial jobless claims for the week ended Jul 6 declined to 209,000 from 221,000 for the week ended Jun 29.

Stocks That Made Headlines

American Airlines Stock Up on Bullish Q2 Unit Revenue View

Shares of American Airlines Group AAL gained 1.8% on Jul 10 to close the trading session at $32.94. (Read more)

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