Shares of healthcare-related companies fell after Amazon.com, Berkshire Hathaway and JPMorgan said they plan to form a venture aimed at lowering healthcare costs for their US employees.
The S&P health sector tumbled 1.9 per cent, the most among the 11 major sectors and set for its biggest one-day drop since October 2016, with all categories of companies dropping.
Rising bond yield continued to weigh on US stocks on Tuesday, pushing the Dow Jones Industrial Average down more than 250 points, with pressure also being piled on by a drop in health companies.
Health insurer United Health fell 4.3 per cent, the most among Dow components, while Express Scripts’ near 10 per cent drop was the biggest on the S&P 500.
Pfizer shares fell 1 per cent. They had risen about 2 per cent in premarket trading after the company’s quarterly results and full-year forecasts beat expectations.
US Treasury yields surged to more than three-year highs on expectations that central banks globally will reduce stimulus as the economic outlook improves. A rise in yields makes borrowing cash more expensive.
More than the rise in yields, the pace of the increase is what could hurt equity markets, said Hussein Sayed, chief market strategist at FXTM.
“A simple question that may come to investors mind, is ‘why would I remain in equities when two-year U.