27 Feb 2009

US sharemarket falls as health sector slumps

1:44 pm on 27 February 2009

US stocks fell in volatile trading on Thursday as investors sold off shares of healthcare companies such as Merck & Co on worries that US President Barack Obama's budget proposal will strangle profits.

A batch of poor economic data added to the gloom, spurring investors to sell shares in big consumer companies such as McDonald's Corp and Coca-Cola Co, which slid 3%.

The plan to expand healthcare coverage and curb costs calls for cutting Medicare payments to private insurers, letting consumers buy cheaper medicines and preventing drug companies from making deals that block generic competition.

Merck was the Dow's biggest weight, down 6.7% at $26.04. Health insurers also fell, including Humana, which lost 19.5% to $23.64.

The Dow Jones industrial average dropped 88.81 points, or 1.22%, to 7,182.08. The Standard & Poor's 500 Index shed 12.07 points, or 1.58%, to 752.83. The Nasdaq Composite Index fell 33.96 points, or 2.38%, to 1,391.47.

The Dow is down 10.2% for the month and 18.2% for the year to date.