US stocks continue to lose steam in their second consecutive day of losses as rising bond yields and healthcare stocks put Wall Street in a corner.
On Tuesday, the Dow Jones Industrial average index shaved off 0.91 percent right as trading started. The index continued to falter throughout the trading session, having the biggest opening gap-down in almost 16 years.
US Treasury bond yields powered through to record highs after the Federal Reserve’s two-day meeting commenced.
All three major indexes were weighed down by healthcare-related stocks. The pullback is likely a symptom of the news that Amzon.com, Berkshire Hathaway and JPMorgan Chase will create a healthcare company with the goal of regulating costs for their US workforce.
The S&P 500 Healthcare index was 2.1 percent lower while the Dow Jones Industrial Average lost 1.39 percent to 26.072.75. The S&P 500 was 1.05 short to 2,823.53 and the Nasdaq Composite index lost 0.93 percent to 7,397.16.
Healthcare company, UnitedHealth Group, had the biggest impact on the Dow index, with stocks down 4.3 percent. Pharmaceutical company, Pfizer, was also on the low spectrum, with a 3.4 percent loss despite its big gains and positive new year outlook courtesy of the Republican tax cut.
Motorcycle company, Harley-Davidson, dropped 7.8 percent after estimating a decrease in motorcycle profits in 2018.
Tech giant, Apple, shaved off 1 percent amid fears that it would cut production of its latest smartphone, the iPhone X.
On the upside, however, it was reported that all three major US indexes are 5 percent higher than what they were at the start of the month. Analysts predict that S&P earnings will be 13.2 percent, 1.2 percent higher than in December last year.
The rising bond yields are reportedly driven by higher trade expectations, as global growth remained steady and the US made way for profitable tax cuts. According to Eric Wiegand, senior portfolio manager at US Bank Private Wealth Management, investors are likely to be cashing in on their gains. They are also looking forward to new information as companies update investors on their yearly earnings and provide forecasts for the new year.
Image Source: Pixabay