Wall Street Down on Health Care Sector

Wall Street Down on Health Care Sector

US stocks slipped today, pressured by health care shares after proposals in President Donald Trump's budget signaled higher regulatory costs for the sector and a cut in federal funding for medical research, and as traders cashed-in gains from one of the best performing sectors so far this year.

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For 2018, the Trump administration has budgeted over $2 billion in fees to be collected by the US Food and Drug Administration from the industry, twice as much as in 2017, according to proposed budget documents released on Thursday.

The Dow Jones Industrial Average fell 15.55 points, or 0.07 percent, to 20,934.55, the S&P 500 lost 3.88 points, or 0.16 percent, to 2,381.38 and the Nasdaq Composite added 0.71 points, or 0.01 percent, to 5,900.76.

After yesterday's Fed rate cut, the financial markets are telling Janet Yellen there’s more work to be done. While the Federal Reserve chair raised interest rates by 25 basis points as expected Wednesday, the outlook was less hawkish than market participants foresaw, with projections for the medium-term tightening cycle largely unchanged.

That propelled markets - judging by the strength of US dollar, bond yields, credit spreads, and stock prices - to effectively deliver a rate cut to the tune of about 15 basis points, according to indexes published by Morgan Stanley and Goldman Sachs Group Inc.

That leaves Yellen facing a predicament similar to one that former Fed Chairman Alan Greenspan called a conundrum in February 2005, when the central bank was raising borrowing costs and long-term yields kept falling and equity markets rallied. At the time, the dilemma was blamed on a global glut of savings. This time around, US financial conditions have loosened decisively since the Fed raised short-term rates in December, its first hike since 2006. That has delivered stimulus to the US economy, while vexing the central bank’s tightening cycle. 



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