Stocks storm back after health care decision
Once down 177 points, the Dow closes off 25 on speculation Europe is negotiating a serious debt deal. Health care shares are mostly flat, but hospital operators soar. Research In Motion will cut a third of its workforce.
The Supreme Court shocked the nation by upholding President Obama's health care legislation today, ensuring that health care will be a major issue in this fall's elections.
Stocks were lower in the aftermath, with health insurance stocks among the big losers, but rebounded strongly in the last hour of trading after German Chancellor Angela Merkel canceled a press briefing at the European Union summit in Brussels. The speculation is serious talks are going on about a solution to Europe's debt crisis.
The European development came after the Supreme Court, in a 5-to-4 decision Chief Justice John Roberts, ruled that the law's individual mandates -- which require Americans who aren't covered by insurance at work to buy insurance or face a fine -- was justifiable if one assumed the fine was a tax. That was good enough to get the law past the argument that the mandate was an unconstitutional expansion of federal power.
The decision was greeted with joy by supporters of the legislation. Republicans -- including presidential candidate Mitt Romney -- vowed to try to repeal the law as soon as possible.
Thanks to the news from Europe, the Dow Jones industrials ($INDU) closed down 25 points to 12,602 after dropping as many as 177 points. The Standard & Poor's 500 Index ($INX) fell 3 points to 1,329. The Nasdaq Composite Index ($COMPX) was off 26 points to 2,849.
Article continues below.
The Nasdaq-100 Index ($NDX) was off 29 points to 2,537. Apple (AAPL), the biggest influence on the index, was down $5.45 to $569.05, contributing five points to the index's loss. Microsoft's (MSFT) loss of 26 cents to $29.91 cost the index about two points. (Microsoft publishes MSN Money.)
The rebound ensured that the four indexes ended the day higher for June with one day of trading remaining.
RIMM shares are staggered by miserable quarter
Research In Motion (RIMM) shares were off a shocking 17.6% after hours to $7.52 after the company reported a fiscal-first-quarter loss of 37 cents a share -- 36 cents worse than expected. Revenue fell 43% to $2.8 billion and missed Street estimates by $300 million. Shares halted after hours at $9.
Worse, its BlackBerry 10 device won't be released until the first quarter of calendar 2013.
The shares had closed off 5 cents to $9.13 in regular trading.
BlackBerry sales were down to 7.8 million units from 11.4 million units a year ago. The company will lay off 5,000 workers by the end of the fiscal year -- a third of its workforce.
Nike results disappoint
After the close, shares of athletic-equipment-and-apparel maker Nike (NKE) were down 10.4% to $86.83 after fiscal-fourth-quarter earnings of $1.17 a share missed the Street estimate of $1.24. Revenue was up 12% to $6.5 billion.
The company attributed the miss to lower gross margins, higher sales, general and administrative spending, an increase in its effective tax rate and a charge related to restructuring Nike Brand Western Europe's operations.
The company's Nike brand futures orders were up 7% -- 12% excluding currency changes.
A down day on Friday?
Futures trading suggests that stocks will be pressured on Friday. The health-care decision will continue to have an emotional effect on the markets.
Leaders of the European Union will finish their summit. There's talk about Germany is coming around to supporting the idea of European-wide bond issues to help Italy and Spain.
Earnings are scheduled for Constellation Brands (STZ) and KB Home (KBH). The latest Chicago Purchasing Managers Index and the University of Michigan Consumer Sentiment Index reports are due.
It's also the last day of the quarter.
|Energy prices -- New York close|
|Thur.||Wed.||Month chg.||YTD chg.|
|Crude oil (-CL)||$77.69||$80.21||-10.22%||-21.39%|
|Heating oil (-HO)||$2.5472||$2.5902||-5.77%||-12.59%|
|Natural gas (-NG)||$2.722||$2.798||12.39%||-8.93%|
|(per mil. BTU)|
|Unleaded gasoline (-RB)||$2.4773||$2.4989||-9.01%||-6.78%|
|(per gallon; AAA)|
Crude oil moves lower
Crude oil (-CL) settled down $2.52 to $77.69 a barrel. Brent crude was off $1.79 to $91.71.
The national average for regular unleaded gasoline fell to $3.369 from $3.383 on Wednesday, according to AAA's Daily Fuel Gauge Report. The price is down 14.5% from the $3.936-a-gallon peak in early April but still up 2.8% for the year.
Gold (-GC) fell $28 to $1,550.40 an ounce. Silver (-SI) fell 69.5 cents to $26.25 an ounce. Copper (-HG) was off 2.35 cents to $3.326 a pound.
Corn (-ZC) slipped to $6.3075 a bushel as drought worries eased.
Interest rates were lower, with the 10-year Treasury yield falling to 1.577% from 1.621% on Wednesday. The dollar was lower against major currencies.
Health stocks drop, then climb back, after court decision
Health-insurance stocks suffered the biggest losses after the Supreme Court decision but rebounded at the close. UnitedHealth (UNH) closed up 31 cents to $59.60 after falling to as low as $55.34. But Aetna (AET) dipped $1.11 to $39.85 after falling to $38.85.
Medical-equipment makers also rebounded, even though their sales are now subject to a 2.3% tax. So, St. Jude Medical (STJ) closed up 13 cents to $38.77. Boston Scientific (BSX) dropped 9 cents to $5.55 after falling to $5.48.
Hospital operators were mostly higher because the law would expand Medicaid coverage and help them finance care for patients who have lacked insurance coverage. HCA Holdings (HCA) jumped $2.86 to $29.47. Tenet Health Care (THC) climbed 27 cents to $5.25.
The Health Care Select SPDR (XLV) exchange-traded fund, which tracks the 52 stocks in the S&P 500's health care sector, was down 17 cents to $37.30 after falling to as low as $36.92.
The health care debate is hardly over
Passed in 2010, the law is intended to end the United States’ status as the only rich country with large numbers of uninsured people, by expanding both the private market and Medicaid.
In all, The New York Times said, tens of millions of people are expected to gain insurance from the law, as part of a march toward universal coverage, a goal that has eluded legislators and presidents -- including Franklin D. Roosevelt, Harry Truman, Lyndon Johnson, Richard Nixon and Bill Clinton -- for generations.
The decision does not mean an end to the debate over health care. For one thing, much of the law doesn't take effect until 2014.
Republicans will attempt to kill the law, favoring a system built around tax credits and what it says are market-based solutions, arguing that competition will keep health care costs in check. The House of Representatives has scheduled a July 11 vote to repeal the law, but Democrats control the Senate and President Obama would veto it
Many businesses opposed the legislation believe it will add to their costs.
Small businesses opposed it because it requires them to provide insurance once employment reaches 50 workers. Many said today they would hold total employment at 49.
The one area where opponents won was the court's decision that the government could not withhold all of a state's Medicaid funding if it refuses to expand its Medicaid coverage. It can, however, withdraw new funding.
The limits of the Commerce Clause
There was one subtly important piece to the health care decision, Tom Scocca noted on Slate. Chief Justice Roberts' opinion rejected the use of the Commerce Clause of the U.S. Constitution to justify the health care law. The penalties that go with the individual mandate are effectively a tax.
The distinction is important because the Commerce Clause has been the key that enabled much social legislation since the 1930s. Roberts' opinion would limit that ability.
Europe and economy weigh on markets
U.S. jobless claims fell to 386,000 from a revised 392,000 a week ago. The original estimate had been 387,00. Thus, the improvement was negligible.
A third estimate of U.S. economic growth as measured by gross domestic product showed the economy growing at an annualized 1.9% in the first quarter, unchanged from the second estimate of growth. Most analysts see the economy growing at these levels for some time.
Until reports came out that a deal might be in the offing, there was deep skepticism that a two-day European Union summit would yield tangible results. Stocks in Germany, the United Kingdom and France were down sharply.
U.S. financial stocks ended lower. The catalyst was a sell-off in shares of JPMorgan Chase (JPM) after The New York Times said the trading losses announced in May may be as much as $9 billion, far more than the banking giant’s initial $2 billion estimate. JPMorgan countered that $4 billion to $6 billion is more likely. The stock were fell 90 cents to $35.88 and was the worst performer among the 30 Dow stocks.
Bank of America (BAC) and Citigroup (C) fell 3 cents to $7.74 and 71 cents to $26.39, respectively.
British bank Barclay's (BCS) tumbled $1.49 to $10.84 in New York after agreeing to pay $450 million to settle charges it had conspired with some 20 others -- all big, global institutions -- to manipulate the London Interbank Offering Rate, one of the world's key measures of the cost of credit. The company's U.S.-born CEO Robert Diamond's job may be threatened.
European fears trimmed shares of companies that do much of their business overseas. IBM (IBM) fell $1.60 to $191.40. United Technologies (UTX) was off $1.56 to $72.60. The declines for the two stocks subtracted 24 points from the Dow by themselves.
There were three winners among the 30 Dow stocks: Chevron (CVX), Kraft Foods (KFT) and AT&T (T).
Amazingly, 265 S&P 500 stocks were higher, led by Genworth Financial (GNW) and Best Buy (BBY), up $1.08 to $20.88. Tenet Health was third. The laggards were health insurer Wellpoint Health Network (WLP) and F5 Networks (FFIV).
Only 14 Nasdaq-100 stocks were higher, led by Micron Technology (MU), up 25 cents to $5.97, and Express Scripts (ESRX), up $1.29 to $54.79. The laggard was Vertex Pharmaceutical (VRTX), down $9.93 to $51.18 as investors were skeptical about the results of a trial of a cystic fibrosis drug.
|Short hits from the markets -- New York close|
|Thur.||Wed.||Month chg.||YTD chg.|
|13-week Treasury bill||0.0800%||0.080%||14.29%||700.00%|
|5-year Treasury note||0.693%||0.719%||3.28%||-16.51%|
|10-year Treasury note||1.577%||1.621%||-0.25%||-15.71%|
|30-year Treasury bond||2.666%||2.693%||-0.22%||-7.72%|
|U.S. Dollar Index||83.007||82.810||-0.15%||3.09%|
|(in U.S. $)|
|U.S. $ in pounds||£0.644||£0.642||-0.72%||0.08%|
|Euro in dollars||$1.24||$1.25||0.70%||-3.93%|
|(in U.S. $)|
|U.S. $ in euros||€ 0.803||€ 0.802||-0.69%||4.09%|
|U.S. $ in yen||79.62||79.69||1.35%||3.26%|
|U.S. $ in Chinese||6.38||6.35||-0.03%||0.84%|
|(in U.S. $)|
|(in Canadian $)|
|(per troy ounce)|
|(per troy ounce)|
|Crude oil (-CL)||$77.69||$80.21||-10.22%||-21.39%|
That might involve repealing parts of ACA and strengthening others, but it needs to be done in a bi-partisan way without the lies and misinformation that have been thrown around by both sides.
And you want what done????? Something in a bipartisan way???????? Your kidding
right? Remember this will have to happen in Washington, the most partisan place
IMO, the whole 2700 pages need to be run through the shredder and a frest start made.
I will not be the cost of health care that will bankrupt us. It will be the cost that insurance
adds to health care the will do the trick. We have no idea what health care costs. We
only know what insurance makes it cost.
Those who oppose Obama Care will be the first one to CRY out loud as soon as some one who did not have Health Coverage and went to the Emergency Dept and got himself/herself treated. It is not right when such people opt to get free Service when most of us pay for the coverage and PAY for these Loosers too !!!.
The Court has given its verdict and therefore those who are not happy, learn to MOVE ON and the Republicans as well as Mr Romney & Co. do some constructive work to improve America's economy rather than indulge in fighting to repeal the ObamaCare.
I thought the Republicans would find this interesting, concerning health care.
In 1989, the very conservative Heritage Foundation took up the problem and looked for a conservative solution. What they came up with was a plan to have everyone covered by making them buy insurance from a private insurance company. This plan had the huge advantage from their point of view that it left the entire health care system in the private sector, with no government involvement. It also meant big profits for the insurance companies. What else could you ask for? Sen. Don Nickles (R-OK), a very conservative senator, introduced a bill with the Heritage Foundation plan in 1993. It didn't pass
That's what we got, dummies
>>>Not when the government is corrupt like this one is! Read your constitution............the people have the right to take down a corrupt government by any means necessary<<<
Perhaps, but not by force. I thought we already had this discusion in 1860.
Poor wall street is unhappy becouse real people in the country might get proper health care.
Crooked Wall Street will have to rip someone else off today! People are getting tired of big corporations ripping us off for their huge gain!!! Screw you!
Dont start whining about healthcare cost going up since this law was upheld, becuz most of you that were against this bill werent doing anything the past 10-15+ yrs to decrease healthcare cost. So just STFU, ur making **** arguments!
How are the folks that are mad at this law dealing with the folks that are "raising the cost"? Not a damn thing. Not one senator has called any health insurer out for raising prices and then when Obummers introduces a bill everyone has an opinion now! I guess repubs wont saying anything to the companies that give campaign contributions to them
The only ppl that we now have to pay for are the folks that are really poor, which i am glad to do (we all are americans, right?!) So i am happy to help out.
What you lames should be mad about is the FRAUD that is going on, which is an easier fix.
By the way NO ONE goes to jail for not paying the "tax". You pay through your income tax.
Lets calculate how much smaller that pool of dependents just got.
>>>r-e-v-o-l-u-t-i-o-n people, take down washington, this is the only way, because this country has to many stupid people votyeing for the same old thiefs back into congress<<<
You do realize that sedition is illegal, don't you? Just sayin.
If you are paying more than $58.33 per month for a healthcare insurance plan, I suggest you dump your insurance policy and go on the new Obama plan of pay the fine after the fact and let the dumbo's who passed this law worry about how to pay the bill!
And Ghee, does this mean it is now illegal for Medicare to automatically deduct hundreds of dollars each month out of the elderlys Social Security checks?............They do that automatically right now. Also, those with secondary insurance who pay hundreds per month should now be able to get away with just paying the $700.00 fine.............right?
And once again the fear based tactics of the neoConnRepoobs have spread more misinformation..there's no end to it. fear and lies over and over and over again about this, I might ad, very mild reform by Obama.
With regards to all the ignorance around small business's. this is all I want to cover. I don't have time to educate the mass ignorance of the faux news crowd.
As for the Claims about the alleged devastation of small business are also way off base. The fact is, ( and I know a certain group of you folks are not interested in facts) businesses with fewer than 50 workers are exempt from the requirement to provide coverage, or pay a penalty to the government. Furthermore, some small businesses with fewer than 25 employees are already getting tax credits under the new law to help defray the cost of providing worker coverage.
Experts project that the law will cause a small loss of low-wage jobs — and also some gains in better-paid jobs in the health care and insurance industries. How about that?
It’s also expected that more workers will decide to retire earlier, or work fewer hours, when they no longer need employer-sponsored insurance and can obtain it on their own with help from federal subsidies. But that just means fewer people willing to work — and it will free up jobs for those who want them. If anything, that could reduce the jobless rate. So all this fear mongering rhetoric on the right about joblessness is unfounded ..just more soundbites from faux newscorp.
r-e-v-o-l-u-t-i-o-n people, take down washington, this is the only way, because this country has to many stupid people votyeing for the same old thiefs back into congress, remember people presidents only sign laws in, congress i.e the elite ) draw up all laws with their friends from wallstreet,lawyers. do you know their are more lawyers in congress than on the street. wow what a country this is. no more rep/no more dems. we need americans that want to help america, and all americans.
it also time for all states to stand up. and say we dont want to be part of the us government. as i know texas can do it, they would be better off doing it.
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[BRIEFING.COM] The major averages ended higher across the board as the S&P 500 advanced 0.8%.
Equities climbed steadily since the opening bell as investors prepared for tomorrow's policy decision from the Federal Reserve. Although chatter in recent weeks has included speculation the Fed would look to taper its asset purchases, today's broad gains suggest investors expect mostly reassuring words from Chairman Bernanke at tomorrow's press conference.
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