Drug stocks hit by Amazon health push, while tech steadies Wall St

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NEW YORK (June 28): Amazon's move to entrench itself in the health sector sent drug stocks sliding on Thursday, but gains in financial and technology stocks helped Wall Street keep its footing.

Amazon.com said it would buy online pharmacy PillPack, sending shares of drug distributors and retailers tumbling as the e-commerce giant moves deeper into the healthcare sector.

Walgreens Boots Alliance, already under pressure after its third-quarter earnings report, tumbled 10.5% and along with UnitedHealth's 2.4% drop pulled the Dow Jones Industrial Average lower.

Shares of CVS Health sank 9.3%, Rite Aid fell 10.1% and Express Scripts was down 3.2%.

The S&P health sector dropped 0.73%, the most among the 11 S&P sectors, while Amazon gained 0.8%.

The U.S. economy slowed more than previously estimated in the first quarter, with Commerce Department data showing gross domestic product increased at a 2% annual rate in the period, instead of the 2.2% pace reported last month.

The revision came amid the weakest performance in consumer spending in nearly five years and with the United States engaged in tit-for-tat trade tariffs with its major trade partners, including China, Canada and the European Union.

While data shows the U.S. GDP growth appears to have regained momentum in the second quarter on the back of a robust labour market and tax cuts, analysts fear the tariff wars could undermine those benefits.

"Investors remain fixated on trade disputes which continue to weigh on risk appetite," said Craig Erlam, senior market analyst at online forex broker Oanda.

"With Trump picking fights on multiple fronts and no sides showing any willingness to back down, we may have to get used to this risk-averse environment in the near-term."

At 9:59 a.m. EDT the Dow Jones Industrial Average was down 76.70 points or 0.32% at 24,040.89; the S&P 500 was up 1.76 points or 0.07% at 2,701.39; and the Nasdaq Composite was up 9.90 points or 0.13% at 7,454.98.

Amazon's burgeoning reach was not limited to just the health sector. Its plans to entice entrepreneurs to set up their own package-delivery businesses sent shares of United Parcel Service and FedEx skidding about 2.5% each.

Seven of the 11 major S&P sectors were higher, with the financial index gaining 0.19%, ahead of results from the second round of the Federal Reserve's stress test for banks and lenders.

The technology sector's 0.43% jump gave the biggest boost to the market.

Accenture jumped 5.1%, after the consulting and outsourcing services provider reported quarterly revenue and profit above estimates.

Marvell Technology jumped 7.9%, after the chipmaker said China cleared its US$6 billion acquisition of rival Cavium, which rose 9.6%.

Declining issues outnumbered advancers for a 1.20-to-1 ratio on the NYSE and a 1.16-to-1 ratio on the Nasdaq.

The S&P index recorded seven new 52-week highs and 22 new lows, while the Nasdaq recorded 17 new highs and 67 new lows.