The Dow Jones Industrial Average (DIJA) or the stock market index of the largest companies had fallen with almost 1.4%. This comes as a response to an announcement that Amazon, JPMorgan Chase and Berkshire Hathaway are working on an independent health care solution for their US employees. This is the second consecutive day when US stocks fall.
Yesterday, the stock market closed with 28 of the 30 major companies in the DIJA. Among them there are Pfizer Inc., and UnitedHealth Group Inc., which had losses of 3.1% and 4.4%. This is the biggest drop in one day since May 2017, according to experts.
Losses were also registered on the S&P (-1.09%) and Nasdaq Composite Index COMP (-0.86%). According to BBC, investors estimate that more market fluctuation is due to come, as the Vix index also changed. This index measures volatility, based on options prices.
The winners of the day were bond yields, which rose up to 5%.
What Makes the US Stocks Fall?
This fall comes as a reaction to the news that Amazon, JPMorgan Chase and Berkshire Hathaway will form an independent health care company available only for their US employees. However, according to the CEOs of the three companies, this project focuses on disrupting the healthcare system in the US.
Moreover, president Donald Trump also announced that he plans to get involved in the healthcare systems and lower the prices of prescription drugs for Americans. Even if experts were reserved in reactions towards the presidential news, they did pay attention to the future health care company. Major news websites also thoroughly covered the story.
Investors are catching up to the fact that rates have risen. The market’s finally catching up, said investment strategist Jonathan Mackay from Schroders.
Some investors might cash in their earnings, as a reaction to this year’s financial forecasts for 2018. This might raise costs of bond yields, which were lower last years. There’s already been a slight raise of costs, due to interest rates.
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