Healthcare stocks pulled down the overall market today, as the White House proposed cutting payments to private insurance plans as part of the new government budget. The Dow Jones Industrial Average ended the day down 88.81 points (-1.22%) and the S&P 500 also fell 12.07 points (-1.58%).
Obama’s proposed $3.55 trillion budget will cut government funding of health insurance programs like Medicare and Medicaid. This decrease in funding will directly hurt healthcare companies, as many of their customers and much of their revenues come from government healthcare plans. Pharmaceutical company Merck (MCK) was the worst performer in the Dow Jones today as a result of this news, and the company’s stock price fell 6.7%.
Bank stocks traded mostly higher today on news that the government could provide up to $750 billion more in support of struggling banking companies. While the money will be held just for emergencies and will not be immediately injected into the banking sector, investors were glad that the government is taking more steps to save the banking sector.
A lot of poor economic news was also announced today, as jobless claims continue to rise more than expected, home sales are falling to record lows, and U.S. factory activity is also declining every month. This continued bad economic news quells any chance for optimism, as the news gives investors a dose of reality and shows that an economic turnaround might not come for a while.
Until tomorrow,
Niki Pezeshki
College Trillionaire
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