Healthcare limits stock gains; oil prices drop on weak demand forecast

NEW YORK (Reuters) – A broad index of stocks around the world pared gains slightly on Thursday as healthcare shares limited Wall Street’s rise, while oil prices turned lower on a forecast for weaker demand.

FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., June 24, 2019. REUTERS/Brendan McDermid/File Photo

The U.S. benchmark S&P 500 stock index was little changed. Shares of pharmaceutical companies fell after the administration of U.S. President Donald Trump withdrew a rule that would have required health insurers to pass on rebates from drugmakers. Conversely, financial shares rose as bond yields jumped following soft demand in an auction of $16 billion in 30-year Treasuries.

The withdrawal of the rule regarding drug rebates benefited shares of insurers and pharmacy benefit managers, which boosted the Dow Jones Industrial Average. The Dow crossed the 27,000 mark for the first time during the session.

MSCI’s gauge of global stocks was up 0.13%.

“The pharma space is having a bad day. The market would be quite a bit higher if it weren’t for that,” said Jamie Cox, managing partner at Harris Financial Group in Richmond, Virginia. “Investors are starting to get worried as the (U.S.) election season approaches, and the first and most prominent punching bag is pharma.”

Oil prices also retreated from early gains after the Organization of the Petroleum Exporting Countries forecast less demand for its crude next year. Earlier in the session, they had hit their highest levels in more than a month.

U.S. crude futures settled 23 cents lower, or 0.38%, at $60.20 a barrel. Brent crude futures settled down 49 cents, or 0.73%, at $66.52 a barrel.

On Wall Street, the Dow Jones Industrial Average rose 172.94 points, or 0.64%, to 27,033.14, the S&P 500 gained 1.73 points, or 0.06%, to 2,994.8 and the Nasdaq Composite dropped 14.12 points, or 0.17%, to 8,188.42.

U.S. shares had previously hit record highs after Federal Reserve Chairman Jerome Powell confirmed the U.S. central bank stood ready to “act as appropriate” in response to risks to the U.S. economy, including disappointing factory activity, tame inflation and a simmering trade war with China.

Powell spoke before the Senate Banking Committee on Thursday following similar testimony before the House of Representatives Financial Services Committee on Wednesday.

Trade jitters stymied European stocks. The STOXX 600 ended 0.12% lower as warnings from small-cap auto and industrial suppliers pushed down shares of car parts companies.

In fixed-income markets, benchmark 10-year U.S. Treasury notes last fell 18/32 in price to yield 2.1221%, from 2.061% late on Wednesday.

Previously, Treasury yields had crept up marginally after data showed the biggest gain in U.S. underlying consumer prices in 1-1/2 years. The data, however, did not change expectations for a rate cut from the Fed.

The dollar index, which measures the greenback against a basket of six major currencies, dipped slightly amid prospects for a Fed rate cut. It was last down 0.05%.

The Japanese yen and the euro were near flat against the dollar.

Spot gold fell 0.80% to $1,407.40 an ounce on stronger-than-expected U.S. inflation data.

Reporting by April Joyner; Additional reporting by Kate Duguid and Stephanie Kelly in New York, Karthika Suresh Namboothiri in Bengaluru, Karin Strohecker, Sujata Rao and Marc Jones in London and Shinichi Saoshiro in Tokyo; Editing by Larry King, Dan Grebler and Susan Thomas

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