Market Wrap: Greek Angst Pulls on Stocks; Health Shares Rise
NEW YORK -- Stocks fell Monday on Wall Street as investors fretted over the consequences of a possible debt default by Greece, but talk of multibillion dollar health care deals buoyed shares in the sector, cutting into the market's loss.
After Sunday's breakdown of the cash-for-reform talks between Athens and its creditors, Greece has two weeks before facing a 1.6 billion euro repayment due to the International Monetary Fund that could leave it out of cash. On Monday, positions among negotiators hardened.
%VIRTUAL-pullquote-This market is moving toward the position of an increasing probability that there is going to be a Greek default.%Indexes had opened sharply lower on the Greek developments but cut losses through most of the session.
"This market is moving toward the position of an increasing probability that there is going to be a Greek default. That's what started us off so badly," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"We've never had a country part of the euro currency system default, so we don't really know what the impacts are going to be. Away from the consensus you got to become a little cautious thinking what the derivative reactions are going to be."
The Dow Jones industrial average (^DJI) fell 107.67 points, or 0.6 percent, to 17,791.17, the Standard & Poor's 500 index (^GSPC) lost 9.68 points, or 0.5 percent, to 2,084.43 and the Nasdaq composite (^IXIC) dropped 21.13 points, or 0.4 percent, to 5,029.97.
Health Care Lends Support
Cigna (CI) shares jumped as much as 19.4 percent to a record high of $164, buoying the health sector, after The Wall Street Journal reported Cigna rebuffed a takeover offer from rival Anthem (ANTM) that valued it at about $45 billion. Cigna closed up 11.7 percent to $153.43.
The WSJ story said UnitedHealth could be also eyeing deals with Cigna or Aetna. UnitedHealth (UNH) shares rose 1.1 percent to $118.98 and Aetna (AET) added 4.4 percent to $121.01. Humana (HUM) previously seen as a target from Cigna, fell 2.8 percent to $206.58.
"This is another indication of the growing importance of clout, or better negotiating power, in the health care market," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, which counts Aetna among its largest holdings.
"You're seeing insurers combine for more power to negotiate with hospitals and pharmaceutical companies."
A deal that was announced involved drugstore operator CVS Health buying Target's pharmacies and clinics. The $1.9 billion deal should help CVS bargain with drugmakers for lower prices. CVS (CVS) shares edged up 0.4 percent to $102.58 while Target (TGT) gained 1.2 percent to $80.45.
Shares of United Technologies (UTX) weighed the most on the Dow industrials, down 2.5 percent at $114.61. It said it is exiting the helicopter business and would decide whether to spin off or sell its $8 billion Sikorsky unit, the U.S. military's largest helicopter maker.
Declining issues outnumbered advancing ones on the NYSE by 1,983 to 1,075, for a 1.84-to-1 ratio on the downside; on the Nasdaq, 1,639 issues fell and 1,149 advanced for a 1.43-to-1 ratio favoring decliners.
The S&P 500 posted 5 new 52-week highs and 12 new lows; the Nasdaq composite 98 new highs and 55 new lows.
About 5.84 billion shares changed hands on U.S. exchanges, below the 5.98 billion daily average so far this month, according to BATS Global Markets.
What to watch Tuesday:
- The Commerce Department reports housing starts for May at 8:30 a.m. Eastern time.
- Federal Reserve officials begin two-day meeting on interest rates.
- Adobe Systems (ADBE) reports quarterly financial results after U.S. stock markets close.