Wall Street slips as US dollar firms on Fed outlook

San Francisco (Mar 7)  Wall Street stocks slipped on Tuesday, led by a decline in healthcare stocks after a tweet from U.S. President Donald Trump on the need to lower drug prices, while expectations the Federal Reserve will raise interest rates supported the U.S. dollar.

Shares of large U.S. pharmaceutical and biotechnology companies sold off after President Donald Trump said he was working on a "new system" to reduce prices in the industry. Shares of Pfizer Inc and Merck & Co shed 1.1 percent, and Amgen Inc dropped 1.4 percent. The U.S. dollar edged up 0.09 percent against a basket of six major trading currencies and gained 0.11 percent against the Japanese yen ahead of the Fed's meeting next week.

The monthly U.S. jobs report, due on Friday, is expected to show an increase of 186,000 jobs, probably enough to push the Fed to raise its base rate again for the second time in three months. U.S. Treasury yields rose on Tuesday, supporting the U.S. dollar, as data showed the U.S. trade deficit grew in January to its widest monthly level in nearly five years. The benchmark 10-year Treasury yield was up nearly 2 basis points at 2.511 percent, while two-year yield edged up 1 basis point at 1.322 percent.

The market is taking in stride, unlike past years, expectations the Fed will raise rates, said Rahul Shah, chief executive of Ideal Asset Management in New York.

"As long as we keep getting macroeconomic data that's supportive of a rate hike we're going to continue to see stocks rally," Shah said. "If financials continue to rally with higher rates and industrials rally with better economic data, that could be enough to power the market higher," he said.

Source: Reuters