Stocks Trim Losses; Nasdaq, Small Caps Lead

Bulls battled to repair early losses in the stock market Monday and found some success. The Nasdaq dived almost 1.5% in the first half-hour of trade and then hacked off most of the loss.




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Small caps, as gauged by the Russell 2000, added 0.2%. The Dow Jones industrial average fell 0.2%, while the S&P 500 lost 0.2% also. The Nasdaq eased about 0.1%.

Volume was running higher on both major exchanges compared with the same time Friday.

Among IBD’s 197 industry groups, only three rose: gold miners, dairy, and metal products distributors. On the downside, hospitals and managed-care stocks scored the worst losses.

Hospital Stocks Rocked

Medical and hospital stocks were reacting to a federal judge’s ruling Friday in Texas on ObamaCare. Judge Reed O’Connor ruled the entirety of the ObamaCare law unconstitutional. President George W. Bush appointed O’Connor to the U.S. District Court in 2007.

Losses were sharp among some health stocks. Centene (CNC) dived 8%. Tenet Healthcare (THC) gapped down 6%. HCA Healthcare (HCA) lost 5%. Dow Jones component UnitedHealth (UNH) sagged 2%. Volume was heavy for all four stocks.

The ObamaCare ruling appeared to surprise the stock market, but it shouldn’t have been a shock. IBD’s Stock Market Today column noted Nov. 27 that the Texas v. Azar case was “lurking in the background.” On Nov. 30, the Big Cap 20 column reported that an overturn was likely “on the same criterion that led the U.S. Supreme Court to approve it: taxes.” Chief Justice John Roberts ruled ObamaCare constitutional because he said it was a tax. But in 2017, the tax penalty was removed.

More Uncertainty

Most legal experts expect O’Connor’s ruling to be appealed. Many expect the ruling to be overturned after another long fight.

The last thing the stock market needs now is more uncertainty.

Meanwhile, two Dow stocks were doing well Monday. Apple (AAPL) rose 1.3% in brisk trade. Boeing (BA) popped 1.9% in moderate volume. Both remain well off their prior highs.

The market is bracing for the Federal Reserve’s two-day meeting Tuesday and Wednesday. The Street expects the Fed to increase rates a quarter point.

In addition, the federal government faces a possible shutdown in five days as President Trump and congressional leaders battle over a border wall.

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