Drug stocks hit by Amazon health push, tech steadies Wall Street

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(Reuters) – Amazon’s foray into the pharmacy space sent drug stocks sliding on Thursday, but gains in financial and technology stocks helped Wall Street keep its footing.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid

Amazon.com said it would buy online pharmacy PillPack, sending shares of drug distributors and retailers tumbling.

Walgreens Boots Alliance, already under pressure after its third-quarter earnings report, tumbled 9.3 percent and along with UnitedHealth’s 2 percent drop pulled the Dow Jones Industrial Average lower.

Shares of CVS Health sank 8.8 percent, Rite Aid fell 10.9 percent and Express Scripts was down 3.2 percent.

The S&P health sector dropped 0.61 percent, the most among the 11 S&P sectors, while Amazon gained 1.2 percent.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., June 28, 2018. REUTERS/Brendan McDermid

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, instead of the 2.2 percent pace reported last month.

The revision came amid the weakest performance in consumer spending in nearly five years and with the United States engaged in tit-for-tat trade tariffs with its major trade partners, including China, Canada and the European Union.

“It’s not unusual at this point in the quarter to have a little bit of a whacking in terms of economic numbers and corporate reports,” said Stephen Lee, founding principal at Logan Capital Management in Ardmore, Pennsylvania.

“That whacking tends to get pulled with some of the political drama in the U.S. and around the world, and that seems to be what is moving things around.”

At 11:15 a.m. ET the Dow Jones Industrial Average was down 9.96 points, or 0.04 percent, at 24,107.63, the S&P 500 was up 2.13 points, or 0.08 percent, at 2,701.76 and the Nasdaq Composite was up 15.04 points, or 0.20 percent, at 7,460.13.

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.

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The stocks drove the S&P industrial index down 0.5 percent.

Six of the 11 major S&P sectors were higher, with the financial index gaining 0.47 percent ahead of results from the second round of the Federal Reserve’s stress test for banks and lenders.

The technology sector’s 0.58 percent jump gave the biggest boost to the market.

Accenture rose 5.5 percent after the consulting and outsourcing services provider reported quarterly revenue and profit above estimates.

Marvell Technology jumped 7 percent after the chipmaker said China cleared its $6 billion acquisition of rival Cavium, which rose 9.1 percent.

Declining issues outnumbered advancers for a 1.19-to-1 ratio on the NYSE and for a 1.18-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and 23 new lows, while the Nasdaq recorded 23 new highs and 86 new lows.

Reporting by Sruthi Shankar in Bengaluru and Savio D’Souza; Editing by Shounak Dasgupta

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