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Dow Closes Above 27,000 For The First Time Ever

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Stocks fluctuated over the course of the trading session on Thursday before eventually ending the day mixed. Despite the choppy trading, the Dow and the S&P 500 reached new record closing highs, with the Dow closing above 27,000 for the first time ever.

While the Dow jumped 227.88 points or 0.9 percent to 27,088.08 and the S&P 500 rose 6.84 points or 0.2 percent to 2,999.91, the tech-heavy Nasdaq edged down 6.49 points or 0.1 percent to 8,196.04.

The advance by the Dow was partly due to a 5.5 percent jump by UnitedHealth (UNH), which rallied 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, pharmaceutical stocks moved sharply lower on the news, with the NYSE Arca Pharmaceutical Index plunging by 1.8 percent.

Biotechnology stocks also showed a significant move to the downside on the day, dragging the NYSE Arca Biotechnology Index down by 1.3 percent.

Gold and commercial real estate stocks also saw considerable weakness, while notable strength was visible among financial and transportation stocks.

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.

Other Markets

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 came under pressure after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.9 basis points to 2.120 percent.

Looking Ahead

A report on producer price inflation may attract some attention on Friday, although trading activity is likely to be somewhat subdued ahead of the unofficial start of earnings season next week.

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