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Benchmarks turned in mixed performances on Monday. This was largely due to the fact that bond yields increased, leading investors to exit in utilities and telecom stocks. Also, sales for Johnson& Johnson fell after the release of a new drug Renflexis by Merck and Co. This also weighed on the S&P 500 and Dow. On the other hand, Nasdaq ended in the green as the tech-rally continued ahead of major earnings for the sector slated for this week.
The Dow Jones Industrial Average (DJIA) declined 0.3% or 66.9 points, closing at 21,513.17. The S&P 500 Index (INX) fell 0.11%, sliding by 2.63 points to close at 2,469.91. This apart, the Nasdaq Composite Index (IXIC) closed 6,410.81, adding 23.05 points or 0.36%. A total of around 5.5 billion shares were traded on Monday, lower than the last 20-session average of 6.1 billion shares. Declining issues outnumbered advancers on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.17-to-1 ratio favored advancers.
Bond Yields Go Up, Utilities Suffer
The yield on 10 year Treasury note increased to 2.26% and this had negative ramifications for safe havens such as utilities and telecom. A selloff in bonds was responsible for the surge in rates, leading investors to offload utilities and the telecom stocks in favor of their safer fixed income counterparts. As a result, this weighed on the S&P 500 Index.
Johnson & Johnson Disappoints As Share Prices Tank
Shares of Johnson & Johnson JNJ fell 1.5% to $133.21 on Monday. This was largely due to the fact that Merck and Co. MRK together with its South Korean partner Samsung Bioepis Co Ltd has started selling Renflexis, a less expensive alternative version of Johnson & Johnson’s rheumatoid arthritis drug Remicade in the United States.
The drug would sell at an astounding 35% discount on the list price of Remicade. This move is touted to bring down the price of this widely sold medicine. The general trend in the prices of generic medicines show that once multiple biosimilars of a drug become accessible, prices drop rapidly due to stiff competition between rivals. Furthermore, this comes as the jolt to the healthcare heavyweight after Pfizer Inc launched Inflectra late last year at a 15 percent discount to J&J’s list price and later dropped it to a 19% discount.
Tech Stocks Show Stellar Performances
Nasdaq closed on a record high on Monday primarily due to splendid performances and broad-based gains by technology stocks. This comes just before the earnings release of FAANG stocks such as Amazon.com, Inc AMZN and Facebook FB which are due later this week. Over the year, Facebook, Apple Inc. AAPL , Amazon., Netflix, Inc. NFLX and Alphabet Inc GOOGL have gained between 25% to 34%. But the primary reason behind Nasdaq’s recent gains has been splendid performance from Netflix . Shares jumped 13.5% after it added over 5.2 million subscribers on July 17, 2017.
Existing Home Sales Stumbled
The existing home sales in the US have taken a hit due to an acute shortage of properties at a time when demand is high. Around 1.96 million houses were up for sale in market last month, skidding 7.1% from a year ago. The median house price has also increased 6.5% to $263,800 in a year’s time. Additionally, The National Association of Realtors announced on Monday that existing home sales dropped 1.8% to 5.52 million units last month.
Stocks That Made Headlines
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