Wall Street Advances amid Speculation of Trump’s Speech

By Joyce Yu

Philadelphia, PA–U.S. stocks gained on Friday with healthcare stocks in focus as President Donald Trump is set to address issues related to the sector.

Reuters

“It’s relatively quiet in terms of drivers today. Trump’s speech really hasn’t had much of an impact on pharma or biotech thus far,” Art Hogan, chief market strategist at B. Riley FBR in Boston, told the Bloomberg. “Three of the four drivers that we had yesterday are still with us, benign 10-year (Treasury yields), oil and dollar, and technically breaking above the 100-day and 50-day on S&P was significant.”

He added, “When you have a breakout, it tends to have a follow through, but early indications look like we maybe a little bit behind on yesterday’s rally.”

During the 2016 election campaign, Trump supported the ideas to lower drug prices including allowing the government’s Medicare plan for older Americans to negotiate prices directly with drugmakers. But there have been critics that the Trump administration has abandoned those ideas after powerful pharmaceutical lobby. The general market expects the policy proposals to have a relatively modest impact on the healthcare system.

White House officials say Trump’s strategies would include requiring insurers and pharmacy benefit managers (PBMs) to share a portion of the rebates they get on prescription drugs with consumers to lower their out-of-pocket costs, as well as making it easier for cheaper generic and biosimilar copies of drugs to reach the market, according to a Reuters report.

Health policy experts are equally doubtful about whether the administration’s proposals to date will have a meaningful impact on the high cost of prescriptions, with Gerard Anderson, a health policy professor at Johns Hopkins University, commenting  that this is not doing anything to fundamentally change the drug supply chain or the drug pricing system.

Height Capital Markets analyst Andrea Harris echoed with the same view. She said she expects “material headline risk” to the stocks but that the administration “will not implement the most material policies that Trump will suggest in the speech in the next two years, if ever.”

Some Wall Street investors, however, brace for the possibility that Trump will diverge from these plans. For concerns about drug pricing regulations, the S&P 500 healthcare sector underperformed the market with 1% decline in in 2018.  Investors don’t like uncertainty and this speech has created a fair amount of uncertainty,” said Les Funtleyder, healthcare portfolio manager at E Squared Capital Management.

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