Stocks Weaker After Biotechs Battered

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U.S. equities finished lower on Wednesday as trading remains quiet ahead of Federal Reserve Board Chair Janet Yellen’s eagerly awaited speech to the Jackson Hole symposium on Friday.

There was action to be found in specific areas, however, as biotech stocks were battered amid outrage and political attention on the recent price hikes on EpiPens by Mylan NV (NASDAQ:MYL), which lost 5.4%. On Tuesday, two senators requested information on the justification for the price increase. And Democratic presidential contender Hillary Clinton called on prices to be lowered after the “outrageous” rise.

In the end, the Dow Jones Industrial Average lost 0.4%, the S&P 500 Index lost 0.5%, the Nasdaq Composite lost 0.8% and the Russell 2000 finished the day down 0.9%. Treasury bonds were little changed, the dollar was stronger, gold lost 1.2% and crude oil fell 2.8%.

crude-oil

Energy prices were hit by an unexpected inventory build, with crude stockpiles rising about 4.5 million barrels versus estimates of an 850,000 draw according to API data released on Tuesday night. The EIA data released Wednesday morning confirmed the build, with stockpiles up about 2.5 million barrels vs. the according to API data released on Tuesday night. The EIA data released Wednesday morning confirmed the build, with stockpiles up about 2.5 million barrels vs. the 495,000 draw expected.

Gasoline oversupply fears were fanned by a nearly flat result for gasoline stockpiles when a 1.3 million barrel decline was expected, given that the summer driving season is coming to an end.

This all comes a day after crude surged on reports Iran would, in fact, attend a meeting of oil producers in Algiers next month — with hopes building once again for a possible supply freeze agreement. Today, there were reports Iraq will participate in the meetings next month with the intent to support disposing the global oversupply to achieve fair oil prices.

Healthcare and materials were the laggards, falling 1.6% and 1.2%, respectively. Defensive telecom and utility stocks displayed relative strength, holding near the unchanged line.

home-sales

On the economic front, existing-home sales disappointed falling 3.2% to a seasonally adjusted annualized rate of 5.4 million in July down from the 5.6 million rate in June and below expectations for a 5.5 million result. The result was only the second year-over-year sales drop in the past 21 months, which is pretty incredible when you think about it.

Tight inventory and higher prices were fingered for the decline, as affordability has been under pressure and new construction is failing to keep up with demand. As a reminder, Tuesday’s new home data showed the best pace of sales in nearly nine years.

crude-oil

Stepping back, the most interest takeaway of the day was the 8.6% surge in the CBOE Volatility Index (NYSEARCA:VIX) which is the biggest one-day rise in the Brexit selloff in late June. This suggest the summertime doldrums we’ve been suffering through for the last two months — tepid volume, constrained price action — is set to end.

I expect one final surge higher, driven by Yellen’s sure-to-be-dovish speech on Friday, heading into the Labor Day holiday. September should the return of downside pressure amid worries about crude oil, a possible Fed rate hike, seasonality, and the approaching U.S. presidential election.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/08/biotechs-myl-mylan-stock-market-today-nyse-dow-jones-industrial-average-investing-news/.

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