Wall Street wavers as Amazon buy hits health stocks, banks gain
(Reuters) - U.S. stocks swung between gains and losses on Thursday, as Amazon’s foray into drug retailing whipped the healthcare sector, while a rise in financial stocks for the first time in 14 days cushioned the markets.
Amazon.com said it would buy online pharmacy PillPack, a move that will put the online retail giant in direct competition with drugstore chains, drug distributors and pharmacy benefit managers.
Walgreens Boots Alliance, already under pressure after its third-quarter earnings report, tumbled 9.4 percent and along with UnitedHealth’s 1.8 percent drop pressured the Dow Jones index.
Shares of CVS Health sank 6.6 percent, Rite Aid fell 10.9 percent and Express Scripts was down 1.7 percent.
The S&P health sector dropped 0.31 percent, while Amazon gained 1.8 percent.
The U.S. economy slowed more than previously estimated in the first quarter, according to Commerce Department data that showed gross domestic product increased at a 2 percent annual rate in the period, from its previous estimate of 2.2 percent.
The revision came as an escalating trade dispute between the United States and its major trade partners, including China, Canada and the European Union, kept investors on edge.
“Sentiment towards trade has become very negative,” said Tom Essaye, founder of investment research firm Sevens Report.
“But if we start to get a better rhetoric on trade, this market is primed to rebound because economic activity remains positive.”
At 12:54 p.m. ET the Dow Jones Industrial Average was up 21.24 points, or 0.09 percent, at 24,138.83, the S&P 500 was up 5.02 points, or 0.19 percent, at 2,704.65 and the Nasdaq Composite was up 18.34 points, or 0.25 percent, at 7,463.43.
Amazon’s burgeoning reach was not limited to just the health sector. Its plans to entice entrepreneurs to set up their own package-delivery businesses sent shares of United Parcel Service and FedEx skidding more than 2 percent.
The stocks drove the S&P industrial index down 0.46 percent.
Six of the 11 major S&P sectors were higher — with a 0.66 percent gain in the financial index — boosting the S&P 500 ahead of results from the second round of Federal Reserve’s stress test for banks and lenders.
Accenture rose 5.2 percent after the consulting and outsourcing services provider reported quarterly revenue and profit above estimates.
Starbucks dropped 4.1 percent after the company said its Chief Financial Officer Scott Maw will retire at the end of November.
Declining issues outnumbered advancers for a 1.08-to-1 ratio on the NYSE and for a 1.17-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and 23 new lows, while the Nasdaq recorded 28 new highs and 99 new lows.
Reporting by Sruthi Shankar in Bengaluru and Savio D'Souza; Editing by Shounak Dasgupta