Health Care Companies Lead U.S. Stocks Lower; Small-Caps Slump

Stocks finished a wobbly day of trading on Wall Street Wednesday with modest losses that erased most of the market’s slight gains from a day earlier.

A sharp sell-off in health care companies far outweighed gains in technology and other sectors. Smaller company stocks fell more than the rest of the market.

Insurers drove the health care sector slide for the second straight day. Investors fear the potential impact on profits from health reform ideas being discussed in Washington and on the presidential campaign trail.

Qualcomm led the gainers in the technology sector. Intel climbed after pulling out of the smartphone modem market. And T-Mobile and Sprint slumped on reports the Justice Department is questioning their proposed merger.

PepsiCo and Morgan Stanley rose after delivering better than expected quarterly results Wednesday. IBM and Netflix fell a day after reporting their earnings.

The S&P 500 fell 6.61 points, or 0.2%, to 2,900.45. The Dow Jones Industrial Average dropped 3.12 points, or less than 0.1%, to 26,449.54.

The Nasdaq composite slid 4.15 points, or 0.1%, to 7,996.08. The Russell 2000 index of small-cap stocks gave up 15.19 points, or 1%, to 1,567.60.

European stock indexes finished higher. Decliners outnumbered gainers on the New York Stock Exchange.

Bond prices held steady. The yield on the 10 year Treasury note remained at 2.59%.

Wednesday’s downbeat finish on Wall Street followed uneven trading in global markets, despite news that China’s economy grew at a better than expected 6.4% annual pace in the January-March quarter. The data suggests Beijing’s efforts to halt a slowdown are working, but its economy is still growing at the weakest pace since 2009.

Several health insurers helped pull the market lower. Anthem gave up 3.6%, Cigna lost 3.7% and UnitedHealth Group slid 1.9%.

The losses pulled the health care sector into the red for the year with a loss of 0.9%. The other 10 sectors in the S&P 500 are up for the year.

All told, health care has fallen 4.5% so far this week.

The decline is partly due to investors favoring cyclical growth sectors such as materials at the expense of less risky seeming stocks.

While the likelihood of a major health care overhaul remains relatively low, enough uncertainty exists that investors are now selling first and asking questions later, Young added.

Sprint and T-Mobile shares fell after a Wall Street Journal report cast doubt on the likelihood of government approval of the companies’ $26.5 billion merger.

Sprint shares slid 6.2%, while T-Mobile dropped 2.2%.

Energy futures finished mostly lower Wednesday. Benchmark U.S. crude oil fell 0.5% to settle at $63.76 per barrel. Brent crude, the international standard, inched 0.1% lower to close at $71.62 per barrel.

Wholesale gasoline gained 0.5% to $2.04 per gallon, while heating oil lost 0.6% to $2.07 per gallon. Natural gas fell 2.1% to $2.52 per 1,000 cubic feet.

Gold was little changed at $1,276.80 per ounce, silver rose 0.2% to $14.93 per ounce and copper climbed 1.3% to $2.97 per pound.

The dollar strengthened to 112.07 Japanese yen from 111.99 yen late Tuesday. The euro rose to $1.1298 from $1.1288.