Stock prices on Wall Street fell on Thursday, particularly shares of pharmaceutical and health insurance companies, as investors fear that savings in the U.S. budget will negatively impact the pharmaceutical industry.
The Dow Jones index fell by 1.22 percent, to 7,182 points, while the S&P 500 index lost 1.58 percent, diving to 752 points. The Nasdaq index, on the other hand, plummeted by 2.38 percent, to 1,391 points. The proposed U.S. budget for 2010, valued at $3.550 trillion, includes cuts to spending for Medicare and Medicaid health insurance programs. The Obama administration aims to expand citizens’ rights to health insurance while also reducing costs across the entire healthcare system, allowing, for example, citizens to purchase cheaper generic drugs, which could negatively affect pharmaceutical companies that produce original medications.
As a result, Merck’s stock price fell by 6.7 percent yesterday, while shares of health insurance company Humana dropped by as much as 19.5 percent. Meanwhile, the S&P index of healthcare companies fell by 5.1 percent. The price of General Motors’ stock also fell sharply by 6.7 percent after the largest U.S. automaker reported a loss of nearly $31 billion last year. New data showing that the recession is deepening also negatively impacted the market. It was reported that the number of Americans receiving unemployment assistance reached a record 5.1 million last week, that new home sales in January fell to the lowest level since 1963, and that the value of orders for durable goods in the same month dropped to the lowest level in six months. In European markets, however, stock prices rose significantly on Thursday. The London FTSE index gained 1.7 percent, reaching 3,915 points, while the DAX index of the Frankfurt Stock Exchange jumped 2.51 percent, to 3,942 points. (H)
