By Kate Gibson
One wouldn't know it by looking at this week's flu-inspired
gains in health care, but the sector is shaping up to be the
biggest loser in an otherwise bright month for stocks, according to
initial results released Tuesday.
At Monday's close, the Dow Jones Industrial Average was up
nearly 5.5% for the nearly completed month, leaving the blue-chip
index down almost 8.6% in 2009, according to a preliminary report
released on Tuesday by Dow Jones Indexes.
The Dow Jones U.S. Financials Index gained the most in April, up
16.8%, while its U.S. Health Care Index posted the largest loss,
off almost 1.4%.
"Over the past month and a half or so, defensive areas of the
market have experienced relative weakness based on the fact that
investors have rotated into economically sensitive areas," said
Michael Sheldon, chief market strategist at RDM Financial Group,
adding that "health care, consumer stables and utilities will
continue to underperform on a relative basis, so long as the
economy continues to pick up."
On Tuesday, health-care shares gained for a second consecutive
day, while the broad market finished lower, led by industrials and
financials. The Dow Jones Industrial Average (DJI) fell 8.05
points, or 0.1%, to 8,016.95. The S&P 500 Index (SPX) shed 2.35
points, or 0.3%, to 855.16, while the technology-laden Nasdaq
Composite (RIXF) slipped 5.6 points, or 0.3%, to 1,673.81.
"Health-care stocks are getting a lift this week because of the
swine flu epidemic," Sheldon said. .
Lab results
Topping Wall Street's expectations also helped bolster shares of
companies including laboratory equipment maker Waters Corp. (WAT),
its shares up more than 16% and ahead 19.6% year-to-date after the
company reported a 7% increase in first-quarter income.
And insurer Coventry Health Care Inc. (CVH) reported a steep
decline in first-quarter profit due in part to higher medical
costs, but is shares rose 7.1% as the company still beat
expectations. .
Anticipated health-care reform also comes into play, with some
health-care companies likely to experience "difficulties in making
money with strong regulatory oversight," said Art Hogan, chief
market strategist, Jefferies & Co.
The most cost-effective providers or companies that help to make
the medical profession more efficient should benefit from expected
changes under the Obama administration, Hogan said.
And shares of drugstore chains including CVS Caremark Corp.
(CVS) and Walgreen Co. (WAG) also climbed, with both expecting to
gain on increased demand from the sale of hygiene products and
pharmaceuticals if swine flu spreads.
CVS' MaintenanceChoice program, launched last year, is designed
to position the drugstore chain as "the low-cost provider of
pharmaceuticals," offering volume discounts for multiple-month
refills, said Hogan.
In Europe, the Dow Jones Stoxx 50 Index was up 9.8% for April as
of Monday's close, leaving that gauge off 4.4% so far this year.
The Dow Jones Stoxx 600 Automobiles and Parts Index tallied the
largest sector gain for the month, up 29.1%, while the Dow Jones
Stoxx 600 Health Care Index posted the sharpest decline, off almost
0.1%, according to Dow Jones' preliminary report. .
In Asia, the Dow Jones Asia/Pacific Consumer Goods Index rose by
the largest percentage, up 15.2% for April, while the Dow Jones
Asia/Pacific Utilities Index tallied the smallest rise, up 0.2%,
Dow Jones said. .
Globally, the Dow Jones World Automobiles and Parts Titans Index
performed best, up 28.7% for the month, while the Dow Jones World
Health Care Titans Index took the biggest hit, retreating 2%.