Sharp losses for health care stocks, banks pull indexes down
NEW YORK — U.S. stocks fell Tuesday as Johnson & Johnson and Cardinal Health led health care companies lower and weak trading results from Goldman Sachs dragged down bank stocks. Stock indexes in Europe also tumbled after the British government called for a surprise early election next month.
KEEPING SCORE: The Standard & Poor’s 500 index shed 5 points, or 0.2 percent, to 2,343 as of 11:20 a.m. Eastern time. The Dow Jones industrial average lost 88 points, or 0.4 percent, to 20,549. Goldman Sachs was responsible for most of that loss. The Nasdaq composite fell 10 points, or 0.2 percent, to 5,846. The Russell 2000 index of small-company stocks dipped 4 points, or 0.3 percent, to 1,356.
Stocks are coming off their biggest one-day gain since March 1, when all four major indexes set record highs. Stocks have mostly traded lower since then, although the Nasdaq topped that record in late March.
HEALTH CARE WOES: Health care products giant Johnson & Johnson fell after investors were disappointed with its sales. The company’s top-selling Crohn’s disease drug Remicade fell 6 percent. The company also said growth for many consumer health products slowed down and payers demanded bigger rebates on treatments for cardiovascular ailments, diabetes, and primary care products. Its stock lost $4.44, or 3.5 percent, to $121.28.
Prescription drug distributor Cardinal Health said it will reach the low end of its profit estimates for this year and it expects a smaller profit next year, partly because drug prices continue to fall. The company will also pay $6.1 billion to buy a group of businesses from medical device maker Medtronic. Cardinal Health sank $9.25, or 11.3 percent, to $72.58.
BANKS STRUGGLE: Goldman Sachs’ revenue fell short of investor projections in the first quarter as its highly-regarded trading desks didn’t perform as well as their competitors. The stock gave up $9.28, or 4.1 percent, to $216.98. It’s up more than 35 percent over the last year and reached all-time high above $250 a share in March.
The drop in bond yields also hurt banks, as lower bond yields mean reduced interest rates and smaller profits on lending.
EUROPEAN ELECTIONS: British Prime Minister Theresa May reversed her position by calling for an early general election in June. May formally triggered Britain’s exit from the European Union last month and she intends to seek a stronger parliamentary mandate. The pound climbed after May’s announcement on the hope that the election will result in May getting a better deal for Britain in its talks with the EU. It rose to $1.2753 from $1.2563.
European stocks fell, as the vote creates even more political uncertainty in Europe days before the first round of French presidential voting. Polls don’t give a clear edge to any of the four leading candidates ahead of Sunday’s vote. The top two will advance to a May 7 runoff and investors are unsettled by the chance that either of the far-left or far-right candidates could pull off a victory. Britain’s FTSE 100 was down 2.3 percent and France’s CAC 40 lost 1.5 percent. In Germany the DAX shed 0.8 percent.
REELING IT IN: Sporting goods store Cabela’s climbed after it accepted a reduced buyout offer of $61.50 a share, or $4.2 billion, from competitor Bass Pro Shops. It also revised the terms of the sale of its credit card business. Bass agreed to buy Cabela’s for $65.50 a share, or $4.5 billion, but antitrust and banking regulators both had problems with the deal and investors weren’t sure it would happen. Cabela’s stock traded as low as $45 in February and climbed $3.87, or 7.2 percent, to $57.56 Tuesday.
BONDS: Bond prices jumped. The yield on the 10-year Treasury note fell to 2.20 percent from 2.25 percent. As bond yields fell, shares of companies that pay big dividends did better than the rest of the market. Household goods makers like Whole Foods Market and Molson Coors traded higher while real estate companies were little changed. Those stocks often rise when bond yields fall because investors view them as an alternative to bonds.
ENERGY: Benchmark U.S. crude futures added 4 cents to $52.69 a barrel in New York. Brent crude, used to price international oils, lost 10 cents to $55.26 per barrel in London.
CURRENCIES: The dollar rose to 108.73 yen from 108.59 yen. The euro edged up to $1.0698 from $1.0642.
ASIAN MARKETS: The benchmark Nikkei 225 index in Japan added 0.4 percent while South Korea’s Kospi edged up 0.1 percent to 2,148.46. The Hang Seng of Hong Kong shed 1.4 percent.