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US: Dow posts biggest drop since May 2017 as stocks tumble
[NEW YORK] Wall Street stocks tumbled for a second straight session on Tuesday, with the Dow posting the largest decline since May, as health care shares sank on worries about Amazon's push into the sector.
The Dow Jones Industrial Average fell 1.4 per cent to 26,076.89, the biggest drop in percentage terms in more than eight months.
The broad-based S&P 500 fell 1.1 per cent to 2,822.43, while the tech-rich Nasdaq Composite Index shed 0.9 per cent to 7,402.48.
US stocks spent most of January on a nearly uninterrupted climb to ever-higher records, but have fallen this week. They were pressured by a spike in Treasury bond yields ahead of a Federal Reserve policy announcement Wednesday that could signal an acceleration in interest rate increases this year.
Investors also are watching for President Donald Trump's State of the Union address late Tuesday.
Adding to the mix, Amazon joined forces Warren Buffett's Berkshire Hathaway and JPMorgan Chase to announce the creation of a company to address runaway health care costs.
Health-related shares were broadly lower, with health insurers UnitedHealth Group losing 4.4 per cent and Cigna 7.2 per cent. Others with big drops included Walgreens Boots Alliance, which lost 5.2 per cent and Merck, which shed 1.6 per cent.
"Investors have continually asked what unexpected development might spoil the strong investor sentiment towards managed care," BMO Capital Markets healthcare analyst Matthew Borsch said in a note.
"Unfortunately, this seems tailor-made to fit the bill." Analysts have questioned whether the two-day retreat marks the start of a more pronounced sell-off after the torrid start to 2018. For more than a year, investors have quickly stepped in to buy anytime there was a dip and some think that tendency will soon surface.
"Today's decline makes sense, considering the big run we have seen this month and all of last year is a rare occurrence," Gorilla Trades strategist Ken Berman said.
"Pullbacks are usually a healthy sign, so a healthy bounce might be in the cards."