US Markets Respond to Political Sideshows, Drug Stocks Plunge

US Markets Respond to Political Sideshows, Drug Stocks Plunge

Pharmaceutical and biotech stocks plummeted today as President-elect Donald Trump said he’d force the industry to bid for government business in order to save the government billions of dollars. He also discussed making it easier to import cheaper drugs in his first formal news conference since the Nov. 8 election.  

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The S&P 500 healthcare index reversed course following Trump's remarks and fell as much as 1.9%. After paring losses it was still down 1.2% and on track for its worst day since Nov. 22. The Nasdaq biotechnology index sank 3.1% and was on track for its worst day in three months. The pullback ended a six-day winning streak for both indexes.

The drug industry had been betting that Trump would be good for business - drug and biotech stocks were up since his election - but it now appears he may take up the banner Democrats carried during the campaign and lock onto drug prices as a populist issue that hits many Americans’ wallets.

The Dow Jones Industrial Average was up 63.87 points, or 0.32%, to 19,919.4, the S&P 500 had gained 0.93 points, or 0.040989%, to 2,269.83 and the Nasdaq Composite had dropped 8.06 points, or 0.15%, to 5,543.76.The CBOE Volatility index, also called Wall Street's "fear gauge", spiked as much as 6.4% before creeping back and was last was up 1%.

The PEOUTS has been tough on businesses that could take advantage of the USA - healthcare, auto makers, any exporter, anyone who did a corporate inversion, pharma, defense contractors and IT suppliers, sometimes hurting a company's bottom stock value with a single tweet. But traders should get used to White House headlines and tweets moving sectors and stocks. This is the new norm.

Meanwhile, most of Washington and the press today was equallty transfixed and trying to keep track of multiple simultaneous Senate confirmation hearings for Trump's cabinet, and Trump's first press conference in 6 months.  

Big US companies start reporting fourth-quarter earnings this week. On Friday, JPMorgan Chase, Wells Fargo, and Bank of America will release their results. 

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