 The Market Sum | Insight after the bell
By Caleb Silver, Editor in Chief Thursday's Headlines 1. DJIA tops 27,000 for the first time 2. Does the Dow Matter? 3. Health Care stocks surge as White House drops drug pricing bill 4. The Dangers of Rate Cuts and Tariff Wars 5. All-time lows for these stocks Markets Closed
 DJIA Tops 27,000 for the First Time
That friendly face with the Dow 27,000 cap is Arthur Cashin, a legendary floor trader on the NYSE who has been there since the late 1950's and has seen it all. He's a mainstay on business news television, and one of the nicest people you'll meet in any industry.
The financial media loves records and milestones. It's our way of keeping score and identifying "moments" to build our coverage around. These numbers don't mean much to individual investors looking for long-term gains, but they do have symbolic importance to the industry and the media.
Today's rally, which was limited to the DJIA, can be partially attributed to Fed Chair Powell's testimony to Congress yesterday and to the Senate today. Lower interest rates appear to be coming, and potentially soon.
But it's important to note that the DJIA is really just 30 stocks. When it was created in 1896 by Charles Dow and Edward Jones, it was intended to track the industrial stocks that were the biggest and more representative of the economy at that time.
Read more: How the Dow Jones Industrial Average was Created
Obviously, companies like United Stated Rubber and American Sugar are no longer around anymore. Nor would they be representative of the U.S. economy in the 21st century. Even General Electric, Thomas Edison's old company and a Dow 30 original, isn't part of the Dow 30 anymore.
Today's Dow components are across industries like technology, health care, banking, insurance, retail, and consumer discretionary. They are arguably not all industrial companies, except for obvious ones like Caterpillar and 3M.
Here, courtesy of CNBC, are the Dow components that have contributed most to the rise of the DJIA from 26,000-27,000.  In case you are wondering, it took 541 days for that to happen. Charlie Bilello did the hard work of tracking the days between each DJIA milestone and the % change between each 1000 point climb. It's remarkable to me that it took 5,168 days to go from 1,000 to 2,000 between 1972 and 1987, but then again that's a 100% increase.  Health Care Stocks Rally as Drug Pricing Rebate Plan Dies As Politico first reported, the Trump administration scrapped one of its proposal for lowering prescription medicine prices by backing down from a policy that would have required health insurers to pass on billions of dollars in rebates they receive from drugmakers to Medicare patients.
This helped health insurance companies and providers like United Health Group (a Dow component), Cigna Corp, and CVS Health Corp—which negotiate rebates with drugmakers on behalf of the government's Medicare program—to continue to benefit from those discounts.
This doesn't mean that Trump's promise to lower prescription drug prices for consumers is dead, but it won't happen through rebates.
P.S. Another smart reader (we have thousands...) pointed out that I overstated the performance of the health care sector so far in 2019 in an earlier post. I was using the ETF RXL as a proxy, but as he pointed out that's a double-levered ETF and not a great representation of the performance of the sector. He suggests, instead, that we look at the ETF XLV, instead. He's right—and it shows a 9.65% gain year to date, underperforming the S&P 500 by about 50%.  Rate Cuts and Tariffs: Is This the New Normal? Another smart reader wrote in to ask if the Fed's expected lowering of interest rates could potentially backfire, despite the recent surge in stock prices. It's the right question, but difficult to answer.
We can say that lower rates usually do grease the wheels for companies to keep spending. It's what they spend on that matters—in the long term. Spending on CapEx (Capital Expenditures), building capacity, and organic growth opportunities is good for business and the economy as a whole. Spending on stock buybacks and boosting dividends is good for existing shareholders, but doesn't necessarily have legs. It works, as we have seen over the past two years, but it's a short-term measure.
Another risk, especially in the current trade war environment, is that the Fed finds itself in a vicious cycle of cutting rates to boost the economy that is being slowed by escalating tariffs. It's monetary policy fighting fiscal policy, instead of the two dancing together in an economic ballet.
Read more: Monetary Policy vs. Fiscal Policy
This illustration from Bank of America's Ethan Harris depicts it well.  Stocks Making All-Time Lows Since we looked at stocks making all-time highs yesterday, it's only fair to look at large cap stocks hitting all-time lows today. We are equal opportunity offenders. There aren't too many on our selective list.
Full list on barcharts.com
Here's a real winner to go out on: 
chart courtesy www.koyfin.com  Stocks rose for several companies in the health care industry today—such as Cigna (9%), Anthem (5%), and CVS (4%)—after President Trump rescinded his effort to halt rebates in government drug plans.  Iron Mountain's stock dropped by over 7% after BofA Securities turned bearish on the information management services company, citing worries regarding the price decrease of recycled paper. Merck & Company's stock fell by over 4% after Trump canceled his drug rebate plan, due to their status as a drugmaker.  Word of the Day Investors are likely to focus on a number of key trends when Amazon reports. For starters, they'll want to know how much the company's popular free one-day shipping for Prime customers has boosted sales and how much it squeezed margins. Investors also will monitor Amazon's core e-commerce business for signs of slowing growth as consumer debt hits levels not seen since before the 2008 financial crisis and consumer sentiment wanes amid ongoing global trade conflicts.
Consumer sentiment is going to be heavily impacted by recent upheavals in the economy, such as the ongoing trade war and the upcoming Fed cut. Here's a little more context:
 Today in History July 11, 1997: Just under two years after breaking the 1000 barrier, the NASDAQ Composite Index rises 11.69 points to close at 1502.62, closing above 1500 for the first time.
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Thursday, July 11, 2019
27,000!
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