Are the Dow's Gains in Jeopardy?

The markets extended their rally a second day on positive housing and manufacturing data. However, could these hard-fought gains be in danger of getting wiped out tomorrow?

The Dow Jones Industrial Average (INDEX: ^DJI) finished up 92 points, or 0.7%, lagging the larger 0.9% gain notched by the S&P 500 while matching the Nasdaq's 0.7% increase. The energy sector continued its nice rebound, up 2.8%, as oil topped $80 per barrel. However, all eyes were on today's second best performing sector: health care.

Trading was halted midday for Arena Pharmaceuticals (NAS: ARNA) as investors anxiously waited for the FDA decision on obesity drug Belviq. And they were rewarded with the first approved weight-loss drug in more than a decade and a 29% jump in shares. While that pop may seem meager on such a huge accomplishment, remember that shares quadrupled over the past two months after receiving overwhelming support from an FDA advisory committee in the form of an 18-4 vote. Arena and Eisai now need to convince doctors that the drug is worth its potential side effects, but given the obesity crisis facing the country, that shouldn't be too difficult.

Both competitors VIVUS (NAS: VVUS) and Orexigen (NAS: OREX) popped on the approval, closing up 7% and 20%, respectively. Arena's success is good for the group, as all three drugs were rejected in the not-too-distant past -- but now the FDA is softening its stance on drugs when diet and exercise can accomplish the same goal. VIVUS' Qnexa has its date with destiny next month, while Orexigen's Contrave is stuck running another round of trials.

The biggest news tomorrow will come from Washington, D.C., as the Supreme Court is set to rule on the constitutionality of the Affordable Care Act. If it stands as is, millions of uninsured Americans will be either extended insurance through Medicaid or forced to purchase it on an exchange, and insurers such as WellPoint can no longer discriminate for pre-existing conditions. If the individual mandate is struck down, then insurers may be put in an untenable situation paying for the sick without balancing out risk using the healthy. If the whole law is struck down -- which would happen probably because the individual mandate was not seen as severable -- we return back to 2009's rising health-care costs, but at least medical-device maker Intuitive Surgical (NAS: ISRG) won't have to pay a 2.3% excise tax on revenue gained from selling its and maintaining its cutting-edge da Vinci machines.

One landmark decision will create distinct winners and losers, and if the mandate is struck down, expect to see a whittling down of the rest of the legislation in Congress to make the ACA workable. If the whole law is thrown out, it may be decades before we see a sweeping attempt at reform again.

Whatever the court decides on Thursday, expect the debate to continue through the 2012 elections. Even if the ACA is upheld as constitutional in its entirety, Republicans have made repealing the health-care legislation one of their top priorities. Fortunately, The Motley Fool's free report, "These Stocks Could Skyrocket After the 2012 Presidential Election," highlights four unique ways to profit from the election -- if you buy the right stocks before the next president's term begins. Get your free copy, available for a limited time only.

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David Williamsonholds no position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Intuitive Surgical and WellPoint.Motley Fool newsletter serviceshave recommended buying shares of WellPoint and Intuitive Surgical. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

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