While you were sleeping: Clinton sinks drug makers

Tuesday 22nd September 2015

Wall Street rose along with equities in Europe, though gave up some of its earlier gains as shares of drug makers dropped on a tweet by Hilary Clinton that she will detail a plan to curb “price gouging.”

Adding to rate hawks, US Federal Reserve Bank of Atlanta President Dennis Lockhart said he expects policy makers to hike interest rates this year. Last Thursday the Fed kept its target rate unchanged.

“As things settle down, I will be ready for the first policy move on the path to a more normal interest rate environment,” Lockhart said in a speech in Atlanta. “I am confident the much-used phrase ‘later this year’ is still operative.”

In New York trading at about 3pm, the Dow Jones industrial average rose 0.8 percent, the Standard & Poor’s 500 Index added 0.6 percent, while the Nasdaq Composite Index rose 0.2 percent.

Gains in shares of Microsoft and those of Visa, last up 2.2 percent and 1.8 percent respectively, helped propel the Dow higher.

Shares of Merck, Pfizer, and Johnson & Johnson were the only three members in the Dow posting declines in afternoon trading, after US Democratic presidential candidate Hillary Clinton said she would announce a plan to take on "price gouging" for specialty drugs.

"Price gouging like this in the specialty drug market is outrageous," Clinton said in a Tweet. "Tomorrow I’ll lay out a plan to take it on."

Shares of Merck traded 2.2 percent lower at about 3.10pm, while those of Pfizer were 1.2 percent weaker.

Meanwhile, a National Association of Realtors report showed sales of previously owned homes in the US slid more than expected last month. It was the first decline after three months of gains. Closings dropped 4.8 percent to a 5.31 million annual rate, down from a revised 5.58 million pace.

"Sales activity was down in many parts of the country last month — especially in the South and West — as the persistent summer theme of tight inventory levels likely deterred some buyers," Lawrence Yun, NAR chief economist, said in a statement. "The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year."

In Europe, the Stoxx 600 Index ended the day with a 0.9 percent increase from the previous close. The UK’s FTSE 100 Index eked out a 0.1 percent advance, Germany’s DAX Index rose 0.3 percent, while France’s CAC 40 Index climbed 1.1 percent.

Shares of Volkswagen plunged 19 percent after the German car maker admitted to cheating in US emissions tests for years with its diesel-powered models.

“I personally am deeply sorry that we have broken the trust of our customers and the public,” Martin Winterkorn, CEO of Volkswagen, said in a statement. “We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly, and completely establish all of the facts of this case. Volkswagen has ordered an external investigation of this matter.”

The US Environmental Protection Agency said on Friday that Volkswagen could face penalties of up to US$18 billion.

BusinessDesk.co.nz

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