After a session that was mostly positive, the Dow Jones ended down 0.7%, and the broader S&P 500 fell 0.4%. The tech-heavy Nasdaq slipped slightly by 0.1%.
Approximately 70% of stocks in the S&P 500 lost ground, with healthcare companies posing the most significant influence on market behavior.
Healthcare sector stocks plummeted after the White House issued letters urging major pharmaceutical companies to reduce prices and make other changes within the next 60 days.
Eli Lilly & Co. dropped 2.6%, UnitedHealth Group fell 6.2%, and Bristol-Myers Squibb decreased by 5.8%.
Gains in some major technology stocks helped soften the broader market decline.
Meta Platforms surged 11.3% following reports that Facebook and Instagram’s parent company exceeded analyst expectations for sales and profits while investing billions in artificial intelligence.
Microsoft climbed 3.9% after also posting results that surpassed analysts’ predictions.
The software pioneer provided investors with an encouraging update on its Azure cloud computing platform, a central component of its AI efforts.
Large tech companies have regularly driven much of the market’s gains due to excitement about the future of artificial intelligence.
On the macroeconomic front, the Commerce Department reported that prices rose 2.6% in June compared to the previous year, measured by the personal consumption expenditures index.
The latest reading of this indicator, favored by the Federal Reserve for assessing inflation, was slightly above economists’ expectations and also marks an increase from the annual pace of 2.4% in May.
Results from another inflation measure earlier this month, the consumer price index, also showed inflation rose in June.
The evolution of inflation is being closely monitored by businesses and the Fed to better assess the impact of President Donald Trump’s intermittent approach to import tariffs.
Companies such as Ford and Hershey’s have recently warned that tariffs are weighing on their latest and projected financial results.
Trump stated that he would impose tariffs on products from dozens of countries starting Friday unless agreements are reached with the United States by today.
The latest developments on the seemingly unpredictable tariff front include a potential pause in the tariff escalation with China and an agreement with South Korea.
However, Trump announced today that he would enter a 90-day negotiation period with Mexico on trade, as the 25% tariffs remain in effect.
Uncertainty about rates and inflation has led the Fed to keep its benchmark interest rate unchanged for the last five central bank meetings, including the one that concluded on Wednesday.
The Fed has been attempting to reduce the inflation rate to its 2% target, but it remains stubbornly stuck above this level.
“Inflation is just a little above the Fed’s target, but it seems likely to rise in the second half due to tariffs,” said Bill Adams, chief economist at Comerica Bank.
