health care

U.S. Equities Rally Late On Eased Concerns Over Regulatory Reforms

U.S. Session Key Developments

•    Government Officials Struggle to  Put Together Health Care, Financial Reforms
•    Initial Jobless Claims and Continuing Claims Higher Than Expected
•    Commodities Post Slight Gains on Dollar Weakness

U.S. stocks rallied into market close today, as investor concerns were eased regarding health care reconciliation and financial regulatory reforms.  The late surge for equities helped push the S&P over the 1,150 level, the highest close for the index since 2008.  Initially, stocks traded lower on the open following a disappointing jobless claims report one hour before market open.  The Labor Department said that initial jobless claims fell to 462,000 last week versus 460,000 expected, and continuing claims unexpectedly rose over 4.55 million.  The news caused the S&P 500 index to dip under 1,139 off the open, before finding its footing and posting a strong rally into market close.  Financial shares led the ascent, as investors seemed more confident that financial regulation would struggle to pass and was unlikely to suffocate future bank profits as some feared the proposed “Volcker Rule” might have.  Senate Banking Committee Chairman Christopher Dodd announced that he will release his version of the regulation without bipartisan support, as talks with Republican Bob Corker have collapsed in recent days.  Following financial shares higher today was the health care sector, which gained nearly 0.5 percent on the S&P.  Investors speculate that health-care reform will be difficult to pass and that has taken some of the uncertainty out of the health care market, according to sector analysts.  Overall, investors continued to seek riskier assets, driving stocks and commodities higher on the session.  Crude oil closed above $82 a barrel, while gold and silver future contracts closed at $1108 and $17.16 respectively.  The U.S. Dollar Index fell for a third time in the last five trading days but held above the 80 level.

DJIA 30                     10,611.84                      +44.51                       +0.42%
The Dow Jones Industrial Average posted the strongest performance among the major U.S. indices led by 1 percent gains for IBM, Disney, Travelers, and Home Depot.  Disney had posted strong gains this week thanks to a strong opening weekend for the company’s newest hit film, “Alice in Wonderland.”  Today, the entertainment giant announced an agreement that gives Starz Entertainment exclusive licensing for Disney movies through 2015.  Overall, the thirty Dow stocks have gained collectively in eight of the past ten trading days, and the index is inching closer to its 2010 high close of 10725 on January 19.

S&P 500                       1,150.24                           +4.63                       +0.40%
The broad-based S&P 500 traded to a 17-month high on strength in health care and financial shares.  Financial shares gained nearly 1 percent led by a strong 5.5 percent gain for Citigroup following bullish commentary from Chief Executive Officer Vikram Pandit.  Pandit said that the bank should be consistently profitable and he “wouldn’t be surprised” if the government decided to sell its 27 percent state in the firm.  Furthering gains for the S&P index was the health care sector, which added nearly half of one percent as Coventry Health, Aetna, and Davita added 3 percent each.

NASDAQ                     2,368.46                         +9.51                     +0.40%
Shares on the tech-heavy Nasdaq gained for a sixth day as technology were generally higher on the day.  Blackberry maker Research in Motion posted the strongest gain among the ten largest tech stocks on the index, adding 1.2 percent.  Oracle also had a strong day, gaining over 1 percent as CEO Larry Ellison was announced to be the sixth richest billionaire this year.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com