US stocks sag on healthcare ruling, euro falls
US stocks fell on Thursday after the US Supreme Court upheld the Obama administration's healthcare overhaul law, while the euro hit a three-week low as divisions among European leaders at a meeting in Brussels further diminished hopes of urgent measures to tackle the region's debt crisis.
The court upheld the centerpiece of President Barack Obama's healthcare reform law that requires most Americans to get insurance by 2014 or pay a fine. Republican leaders and other opponents who claim the law is too costly and an over-reach of government power vowed to repeal it.
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US healthcare sector stocks were generally weaker after the ruling, while stocks that stand to benefit from more government business rallied.
Financial shares took a beating after British bank Barclays plc
Investors turned more cautious after data showed the US economy is losing momentum, while Germany's unemployment rose in June, posing a risk for global growth.
Also weighing on investor sentiment was the issue of whether Obama and Congress will agree to extend tax cuts and unemployment benefits before year-end. Traders fear a failure to do so could tip the United States back into recession.
"There is an overhang from Europe and here on Capitol Hill. That's creating pessimism and pessimism brings low expectations," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Analysts said that with the market so focused on the outcome of the European summit, trade in stocks and the euro would remain choppy, driven by headlines from the meeting.
European Union leaders will ask the bloc's top four officials to develop the building blocks they have identified so far into a detailed, time-bound roadmap to a genuine economic and monetary union, draft conclusions of the EU leaders' summit showed.
German Finance Minister Wolfgang Schaeuble denied a report that his country could be willing to move sooner than expected to accept shared liability of euro zone debt, reinforcing the notion there would be little progress toward a crisis solution at the meeting.
This propelled yields on 10-year Spanish bonds above 7% and 10-year Italian debt to 6.25%. These are seen as unsustainable borrowing costs for the euro zone's third- and fourth-biggest economies.
Wall Street's three major stock indexes were more than 1% lower, led by losses in banking and healthcare.
In light, choppy trading, the Dow Jones industrial average was down 147.81 points, or 1.17% at 12,479.20. The Standard & Poor's 500 Index was down 16.13 points, or 1.21%, at 1,315.72. The Nasdaq Composite Index was down 53.35 points, or 1.86%, at 2,821.97.
The S&P healthcare index was down 1% while the Morgan Stanley healthcare payor index was last up 0.3% after dropping 1% shortly after the high court narrowly upheld the landmark law that requires most Americans to buy healthcare insurance.
Shares of large health insurers fell, with Wellpoint
The FTSEurofirst 300 index of top European company shares ended down 0.5% at 995.14. The STOXX European banking index closed down 2.36%.
Barclays stock shed 15.5% at 178.65 pence after the bank agreed to pay a $453 million fine for manipulating interest rates on the London interbank market.
In Tokyo, the Nikkei index finished up 1.65%.
MSCI's world equity index fell 0.68% to 301.52, bringing its quarter-to-date decline to close to 10%.
The euro fell 0.43%to $1.2417 after touching a three-week low versus the dollar at $1.2405.
The dollar index was up 0.23% at 82.804 after touching its highest level in about 1-1/2 weeks.
The move to lower-risk investments fed bids for US Treasuries and German Bunds. Benchmark 10-year Treasury notes were up 13/32 in price at 101-19/32 to yield 1.57%, down nearly 5 basis points, while Bund futures were up 0.7% at 141.80.
Anxiety about slowing global growth and the outcome of the EU summit stoked selling in oil and other commodities.
Gold fell to its lowest since June 1. It last traded down 1/4% at $1,550.50 an ounce.
Brent crude futures in London fell $1.88, or 2.01%, to $91.62 a barrel, while US oil futures dropped $2.21, or 2.74%, at $78.00 a barrel.