EU Summit, Healthcare Decision Cast Shadow on Wall Street Trading

Bikram Pandey
28 Jun, 2012
New York City

Stocks on Wall Street closed lower on the weakness. U.S. Supreme Court

[R]4:15 PM New York – Stocks on Wall Street closed lower on the weakness. U.S. Supreme Court’s decision to allow universal care to go forward is expected to reshape healthcare industry and political debate. European leaders negotiate to increase fiscal and banking union.[/R]

Stocks were weak on Wall Street on a historic day after the Supreme Court upheld far reaching healthcare reform that is likely to touch every American and has a potential to reshape healthcare industry.

U.S. indexes declined after the government confirmed 1.9% growth in the first quarter and weekly jobless claims fell 6,000 to 386,000. Banks were in focus after the loss at JP Morgan linked to derivates trading could rise at least above $6 billion and may reach as high as $9 billion.

The Supreme Court voted in a favor of President Obama’s healthcare reform that includes individual mandate. The decision pushes forward universal care long sought by lawmakers and presidents as far back as seven centuries and will provide millions with insurance coverage that many lack.

The court’s decision is expected to accelerate the march towards universal coverage long sought by several presidents and lawmakers dating back six centuries and take a root in one of the most advanced nations in the world where a large number of people are uninsured.

In stocks, healthcare insurers dropped sharply after the Supreme Court upheld the healthcare reform. American Greetings first quarter net tumbled 78%. Family Dollar third quarter net increased 5.3% and lifted fiscal outlook and Paychex fourth quarter net increased 4%.

NewsCorp finally succumbed to shareholder demand for more than a decade to separate its news operation from entertainment division. Multiple far reaching inquiries in its UK news operations finally forced its controlling shareholder Rupert Murdoch to protect its larger and more profitable entertainment business from the accumulated liabilities and investigations that are likely to drag several years.

The European indexes slumped and European leaders on the first day of the summit finalized the bailout for Cyprus and also negotiated terms of loans for Spanish banks. Separately, IMF also said it is prepared to renegotiate with Greece after a visit next week that will determine the current fiscal status of the struggling nation.

Italy raised €5.4 billion in a bond auction. German jobless rate rose and UK home prices fell in June and the UK economy contracted in the first quarter. Veolia agreed to sell its UK regulated water unit for $1.93 billion.

Stocks in Tokyo advanced and the benchmark Nikkei jumped 1.6% to close at a six-week high. Retail sales in May increased at a slower pace than in April but were ahead of expectations and institutional investors increased exposure to domestic stocks.

Australian indexes lost most the gains of the day in late afternoon as the prospect of an outcome from the meeting of European leaders. News Corp said it will separate its news and entertainment operations. Caltex gained on higher profit estimate.

Commodities, Bonds and Currencies

The 10-year bond yield decreased to 1.59% and 30-year bond fell to 2.68%.

The U.S. dollar inched up to $1.244 to a euro and fell against the Japanese yen to 79.40 yen.

Immediate delivery futures of Texas crude oil decreased $1.77 to $78.44 a barrel and Brent crude declined $1.58 to $91.92, futures of natural gas decreased 0.02 cents to $2.77 per mbtu and gasoline price decreased 0.14 cents to 261.90 cents a gallon.

In metals trading, copper fell 2.1 cents to $3.33 per pound, gold decreased $24.20 to $1,554.20 per ounce and silver decreased 67 cents at $26.63.