Asian shares mostly higher after Wall St sets new records

FILE - In this July 5, 2019, file photo trader Benjamin Tuchman works at the New York Stock Exchange in New York. The U.S. stock market opens at 9:30 a.m. EDT on Thursday, July 11. (AP Photo/Mark Lennihan, File)

Technology and big health care sector companies helped drive stocks higher on Wall Street in midday trading Thursday, pushing the Dow Jones Industrial Average above 27,000 for the first time.

The Dow’s milestone comes a day after the S&P 500 index briefly climbed above 3,000 for the first time and the Nasdaq composite closed at an all-time high. The three major indexes were on track to close at all-time highs Thursday.

The market shook off a two-day slide earlier this week and has been trending higher as investors have grown more confident that the Federal Reserve may cut interest rates for the first time in a decade as soon as the end of this month.

On Wednesday, Fed Chairman Jerome Powell said that many Fed officials believe a weakening global economy and rising trade tensions have strengthened the case for a rate cut. The remarks came as Powell gave testimony before the House Financial Services Committee.

New data showing consumer prices rose in June from a year earlier wasn’t expected to give the Fed reason to reconsider whether it should lower rates, if necessary. Inflation has remained muted through much of the economy’s 10 year expansion, which Powell has said cited as a justification for potentially lowering rates.

Chipmaker Nvidia led the technology sector higher, climbing 4.4%.

Cigna, CVS Health and UnitedHealth Group topped the gainers in the S&P 500 after the White House withdrew a drug rebate plan that had aimed to reduce the cost of medications for people on Medicare by shifting rebates from insurers and distributors to patients.

KEEPING SCORE: The S&P 500 rose 8 points, or 0.3%, to 3,001 as of 12:06 p.m. Eastern Time.

The Dow gained 199 points, or 0.7%, to 27,059. The Nasdaq composite rebounded after a brief slip, climbing 0.3%.

Major stock indexes in Europe fell.

THE QUOTE: “With the markets at 27,000 on the Dow and 3,000 on the S&P, they’re baking in that a deal gets done with China, that the Fed cuts rates and remains dovish and then earnings and guidance come in better than expected,” said Sean Lynch, managing director of equities at Wells Fargo Private Bank. “We get a hiccup in any one of those, you’ll see a little bit of a pullback in the market.”

SECTOR BY SECTOR: Retailers and other consumer-focused companies also notched gains. Lowe’s Cos. rose 1.6%. Kohl’s added 1.2%.

Banks also helped lift the market. They got a boost from a pickup in the yield on the 10-year Treasury note, which rose to 2.10% from 2.06% late Wednesday. When bond yields rise, they push interest rates on mortgages and other loans higher, making them more profitable for lenders. Goldman Sachs Group gained 1.8%.

Despite the gains for big health care companies, the sector was down overall. Merck & Co. dropped 3.5%.

Energy stocks were the biggest laggard. Cimarex Energy dropped 1%. Real estate and materials stocks also fell.

Real estate and utilities stocks also took losses, a sign that investors were shifting money away from less risky assets.

EARNINGS PICTURE: Traders also weighed a mix of corporate earnings reports, Delta Air Lines and aviation maintenance company Air notched gains after their latest quarterly results topped Wall Street’s forecasts. Bed Bath & Beyond and Fastenal slumped on disappointing results.

Corporate earnings will keep investors busy starting next week, when S&P 500 companies begin reporting results for the April-June quarter.

Companies have been lowering expectations for how much profit they made in the quarter. Wall Street now projects that overall S&P 500 company earnings for the quarter fell 2.6% from a year earlier, according to FactSet. As recently as the end of March, earnings were forecast to be down only 0.5%.

This could be the first time in three years that S&P 500 companies report a back-to-back decline in overall earnings.

DRUG REBATE PLAN SCRAPPED: Drugstore chains rose after President Donald Trump withdrew a drug rebate plan that aimed to reduce the financial bite of costly medications for people on Medicare.

The once-highly promoted plan from Health and Human Services Secretary Alex Azar ran into opposition within the White House. The pushback grew after the nonpartisan Congressional Budget Office estimated the plan would have little impact on manufacturer prices and would cost Medicare $177 billion over 10 years because it would lead to higher premiums subsidized by taxpayers.

Cigna surged 11.6%, CVS Health gained 5.5% and UnitedHealth climbed 5.1%.

CONSUMER PRICES: The Labor Department said Thursday that the consumer price index increased 1.6% in June from a year earlier. That is down from 1.8% in May and the second straight drop. It rose 2.1% from a year ago.

Inflation has been muted throughout the 10-year expansion, now the longest on record, even as the unemployment rate has dropped to a very low 3.7%. Powell cited persistently low inflation on Wednesday as a justification for potentially lowering short-term interest rates at the Fed’s next meeting in late July.

LOSING ITS GRIP: Fastenal slid 4.9% after the maker of industrial and construction fasteners’ latest quarterly results fell short of Wall Street’s expectations.

TAKING FLIGHT: Air surged 9.6% after the airplane maintenance company’s fiscal fourth-quarter earnings and revenue beat analysts’ expectations.

BEYOND DISAPPOINTING: Bed Bath & Beyond slumped 7% after the home goods retailer reported revenue that fell short of forecasts.

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