U.S. stock indexes trimmed their losses Tuesday morning and the Nasdaq bobbed up and under the break-even line. The S&P 500 inched down, and the Dow Jones industrial average lagged.
The Nasdaq and the S&P 500 each eased 0.1%. Small caps did a bit worse, down 0.5%. The Dow Jones was off 0.3%.
Volume was running lower on the NYSE but higher on the Nasdaq.
One stock accounted for a big slice of the blue-chip Dow Jones’ drop. United Technologies(UTX) dropped 6% after announcing its plans to split the company into three companies. The big cap is a diversified company that makes everything from aircraft engines to elevators, climate control, and security systems.
In the S&P 500, standout stocks for the day included Delta Air Lines (DAL), up 2% as it tried to clear a cup-with-handle pattern, and Tractor Supply (TSCO), up 2% as it reclaimed its 50-day line.
Delta has stepped up earnings growth from 4% to 11% and 17% in recent quarters. Analysts expect the earnings acceleration to continue with a 27% increase in Q4.
Tractor Supply also is improving earnings. In recent quarters, earnings fell 3% and then increased by 24%, 35%, and 32%. Analysts expect earnings growth for the full year 2018 to increase 28%, which would be the fastest growth in seven years.
The stock market initially opened lower on news late Monday that President Trump is ready to escalate the trade war on China.
ObamaCare Fight Is Back
Another factor lurking in the background is a federal judge’s expected ruling in Texas v Azar, a case that could strike down ObamaCare.
The Supreme Court declared ObamaCare constitutional because Chief Justice Roberts and others considered ObamaCare a tax. But Congress reduced the tax penalty to 0% in the 2017 tax cut law. Since the basis for ObamaCare’s constitutionality is the tax penalty, the elimination would leave no grounds for the law to stand on, critics of the law say.
A ruling from Texas is expected any day now.
Should ObamaCare be overturned, some health-related stocks could be affected. Investors might watch the reaction for stocks such as Centene (CNC), Medical Properties Trust (MPW), Universal Health Services (UHS), HealthEquity (HQY) and Aetna (AET).