Thursday, February 2, 2023

Banks and tech companies help stocks higher; drugmakers dive 

By on October 26, 2017

Specialist Peter Mazza, left, works with traders Kevin Lodewick, center, and Joseph Lawler on the floor of the New York Stock Exchange, Thursday, Oct. 26, 2017.  (AP Photo/Richard Drew)

NEW YORK – U.S. stocks rose Thursday as gains for technology companies and banks helped the market recover some of its losses from earlier in the week. However drugmakers and distributors tumbled.

The European Central Bank said Thursday it will begin gradually reducing the bond purchases it’s been making to strengthen the regional economy. Investors were glad the bank isn’t being more aggressive. The euro weakened and European stock indexes jumped. Technology companies recovered some of the ground they lost a day ago, and banks and credit card companies jumped as bond yields continued to climb.

Drugmakers sank after Celgene and Bristol-Myers Squibb slashed their forecasts. Late in the day, drugstores and companies that distribute medications sank on reports Amazon is taking steps to move into the pharmaceutical business by getting licenses to distribute medications wholesale.

For years the European Central Bank has bought bonds to help strengthen the region’s economy. Starting in January the bank plans to cut the size of its purchases in half, to 30 billion euros a month.

Scott Wren, senior global equity strategist for Wells Fargo Investment Institute, said investors were relieved the bank did not announce a bigger cut in bond purchases or take more aggressive steps.

“The market was a little bit fearful that the ECB was going to be more hawkish,” he said. “That wasn’t the case.”

The Standard & Poor’s 500 index rose 3.25 points, or 0.1 percent, to 2,560.40. The Dow Jones industrial average gained 71.40 points, or 0.3 percent, to 23,400.86. The Nasdaq composite lost 7.12 points, or 0.1 percent, to 6,556.77. The Russell 2000 index of smaller-company stocks added 3.98 points, or 0.3 percent, to 1,497.46.

France’s CAC-40 jumped 1.5 percent and the DAX in Germany gained 1.4 percent. Britain’s FTSE 100 added 0.5 percent.

The euro fell to $1.1657 from $1.1807 as investors think interest rates in Europe will stay lower for longer than they had expected. The weaker euro helped shares of companies that export goods from Europe.

Bond prices edged lower. The yield on the 10-year Treasury note rose to 2.46 percent from 2.44 percent as yields and interest rates remained at seven-month highs. Higher rates mean banks can make larger profits from mortgages and other lending. SunTrust Banks rose 83 cents, or 1.4 percent, to $60.61 and American Express jumped $2.16, or 2.3 percent, to $95.69.

And Wren, of Wells Fargo, said the ECB and the Federal Reserve might both end up raising interest rates faster than investors currently expect. Concerns about higher interest rates helped push stocks lower on Wednesday and Wren said the same fears could have a big effect on stocks in 2018.

“The market should be worried about the Fed raising rates three times next year, like they’ve hinted,” he said.

Drugmaker Celgene plunged after it reduced its forecasts for this year, partly because it expects weaker sales of its new psoriasis treatment Otezla. Celgene also said it won’t meet its longer-term goals: it cut its profit and sales projections for the year 2020 as it anticipates weaker sales of new products and medications to treat cancer and inflammation.

Celgene stock lost $19.57, or 16.4 percent, to $99.99. Bristol-Myers Squibb lost $3.05, or 4.8 percent, to $60.95 after it reduced its annual forecast. Other drugmakers including Amgen and Gilead Sciences also stumbled.

Materials companies climbed after a round of strong company results. Chemicals maker Dow DuPont jumped $1.96, or 2.8 percent, to $73.05 and industrial and medical gas company Air Products and Chemicals gained $6.80, or 4.4 percent, to $161.39.

Drugstores, prescription drug distributors and pharmacy benefits managers sank after the St. Louis Post-Dispatch reported that Amazon has received wholesale pharmacy licenses in at least 12 states, the latest suggestion the company intends to enter that market. Investors in those companies fear Amazon will slash prices and hurt their revenue.

Walgreens fell $2.25, or 3.2 percent, to $67.11. McKesson, which rose as much as 7.4 percent in early trading after its quarterly report, wound up with a loss of $7.84, or 5.2 percent, to $143.54. Pharmacy benefits management company Express Scripts shed $2.23, or 3.6 percent, to $58.93.

Amazon reported its third-quarter results after the close of trading. Its stock rose 8 percent after its profit and sales surpassed analysts’ estimates.

CVS Health tumbled $2.22, or 2.9 percent, to $74.31. Minutes before the close of trading, the Wall Street Journal reported that the drugstore-pharmacy benefits company is in talks to buy health insurer Aetna. Aetna stock jumped $18.48, or 11.5 percent, to $178.60.

Benchmark U.S. crude added 46 cents to $52.64 a barrel in New York. Brent crude, used to price international oils, rose 86 cents, or 1.5 percent, to $59.30 a barrel in London.

Wholesale gasoline rose 2 cents to $1.75 a gallon. Heating oil picked up 2 cents to $1.84 a gallon. Natural gas fell 3 cents to $2.89 per 1,000 cubic feet.

Gold gave up $9.40 to $1,269.60 an ounce. Silver fell 11 cents to $16.81 an ounce. Copper lost 1 cent to $3.18 a pound.

Japan’s benchmark Nikkei 225 index edged 0.2 percent higher while South Korea’s Kospi dipped 0.5 percent. The Hang Seng in Hong Kong slipped 0.4 percent.

The dollar rose to 114 yen from 113.72 yen.

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