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Dow Climbs To New Record High Above 27,000

wallstreet oct29 11jul19 lt

After showing a lack of direction earlier in the session, stocks have moved mostly higher over the course of the trading day on Thursday. With the upward move, the Dow has reached a new record intraday high, climbing above 27,000 for the first time ever.

In recent trading, the Dow and the Nasdaq reached new highs for the session. The Dow is up 204.62 points or 0.8 percent at 27,064.82, the Nasdaq is up 18.99 points or 0.2 percent at 8,221.52 and the S&P 500 is up 8.18 points or 0.3 percent at 3,001.25.

The advance by the Dow is partly due to a 5.4 percent jump by UnitedHealth (UNH), which is jumping along with other health insurers on news President Donald Trump is abandoning a plan to eliminate rebates from government drug plans.

The proposal was the centerpiece of Trump's blueprint to lower drug costs but faced stiff resistance from pharmacy-benefit managers.

On the other hand, biotechnology and pharmaceutical stocks have moved sharply lower on the news, with the NYSE Arca Biotechnology Index and the NYSE Arca Pharmaceutical Index tumbling by 1.5 percent and 1.8 percent, respectively.

The upward move by the broader markets partly reflects renewed optimism about a near-term interest rate cut, as Federal Reserve Jerome Powell testifies before the Senate Banking Committee.

Powell's prepared remarks mirrored those he delivered before the House Financial Services Committee on Wednesday, with the Fed chief reiterating the central bank will "act as appropriate" to sustain the economic expansion as "crosscurrents" continue to weigh on the outlook.

In U.S. economic news, the Labor Department released a report before the start of trading showing an unexpected uptick in U.S. consumer prices in the month of June.

The Labor Department said its consumer price index inched up by 0.1 percent in June, matching the slight increase seen in May. Economists had expected consumer prices to come in unchanged.

Excluding food and energy prices, core consumer prices rose by 0.3 percent in June after inching up by 0.1 percent for four consecutive months. Core prices had been expected to edge up by 0.2 percent.

Andrew Hunter, Senior U.S. Economist at Capital Economics, does not expect the stronger than expected core consumer price growth to prevent the Federal Reserve from cutting interest rates later this month and expressed doubt the strength will be sustained.

"Higher tariffs could yet put some further upward pressure on core goods prices over the coming months but, with growth in unit labor costs slowing, we still think core CPI inflation will remain muted," Hunter said.

He added, "With the latest surveys pointing to a sharp slowdown in activity growth, we expect the Fed to follow a 25bp rate cut this month with further cuts in December and March next year."

A separate Labor Department report showed first-time claims for U.S. unemployment benefits unexpectedly fell in the week ended July 6th.

The report said initial jobless claims dropped to 209,000, a decrease of 13,000 from the previous week's revised level of 222,000. Economists had expected jobless claims to inch up to 223,000.

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Thursday. Japan's Nikkei 225 Index climbed by 0.5 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

Meanwhile, the major European markets moved to the downside on the day. The French CAC 40 Index, the German DAX Index and the U.K.'s FTSE 100 Index all fell by 0.3 percent.

In the bond market, treasuries have come under pressure after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.2 basis points at 2.093 percent.

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