UNH UnitedHealth Group Inc

By Nathan Allen and Michael Wursthorn 

A rally in health-care stocks pushed the Dow Jones Industrial Average over 27000 for the first time after the Trump administration abandoned a plan to curb drug rebates.

The decision canceled a plan that would have eliminated rebates from government drug plans, easing concerns of a massive disruption to the U.S. pharmaceutical industry.

Shares of UnitedHealth jumped 5.1%, leading the Dow industrials higher. Meanwhile, Cigna and CVS Health added 12% and 5.7%, respectively, helping the S&P 500 notch a slim gain in recent trading.

The Dow industrials gained 198 points, or 0.7%, to 27059, while the S&P 500 added 0.2%. The Nasdaq Composite rose 0.2%. Major U.S. indexes extended their gains from Wednesday's session, helping to reverse stocks' recent faltering amid concerns that investors were overestimating the likelihood of a rate cut. Federal Reserve Chairman Jerome Powell's dovish comments and minutes from the Fed's June policy meeting reassured traders that further easing is the most likely course of action.

Mr. Powell is speaking again on Thursday, though analysts don't expect him to provide much new information. U.S. consumer-inflation data will be in focus, as weak inflation would support the case for further monetary easing.

"Powell needs a low inflation number to bolster the rate-cut case. If it proves to be just like last week's employment read and also comes in strong, then perhaps we've all been overeager for a cut," said Mike Loewengart, head of investment strategy at E*Trade.

U.S. government-bond yields, meanwhile, extended early gains after data showed that consumer prices rose in June, a sign inflationary pressures could be stabilizing after a period of weakness. Core inflation, which strips out volatile food and energy prices, rose faster than expected. The yield on 10-year U.S. Treasurys climbed to 2.087% from 2.061% a day earlier. Bond prices and yields move in opposite directions.

Elsewhere, minutes from the European Central Bank's June policy meeting showed that officials are likely to consider injecting fresh stimulus into the eurozone in light of weak inflation data. The minutes suggest policy makers will weigh cutting the bank's key interest rate or restarting its EUR2.6 trillion ($2.92 trillion) bond-buying program.

Stocks in Europe edged lower, reversing an earlier gain, as the pan-continental Stoxx Europe 600 declined 0.2%.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

July 11, 2019 12:05 ET (16:05 GMT)

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