RTRS: U.S. stocks slip on budget plan as oil surges
The cost of extra borrowing to pay for a record $1.75 trillion (1.2 trillion pounds) U.S. budget deficit pushed U.S. stocks and government debt prices down on Thursday, as oil rallied for a third straight day on signs of rising demand.
U.S. gold futures ended lower for a fourth consecutive session after U.S. President Barack Obama's budget offered the promise of a better economy, denting bullion's appeal as a safe haven.
The dollar fell against the euro, as investors expressed a willingness to take on more risk, although a report showing a plunge in new U.S. home sales in January added fresh evidence of a sagging economy, which helped limit losses.
World stocks had rallied as governments made fresh moves to support weak economies and banking systems, but Obama's plans to expand healthcare coverage and curb costs by cutting Medicare payments to private insurers pushed U.S. stocks down.
"They are certainly looking at providing healthcare across the board for everyone," said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.
"But to pay for that they are looking to obviously reduce revenue for some of the healthcare agencies," he said.
Merck (MRK.N) and Johnson & Johnson (JNJ.N) were the No. 1 and No. 3 drags on the Dow with the budget proposal taking direct aim at drugmakers and health insurers to help fund an overhaul of the U.S. healthcare system.
The American Exchange Pharmaceutical Index .DRG fell 4.1 percent, while health insurers plunged. Humana Inc (HUM.N) fell almost 20 percent, while Aetna Inc (AET.N) and UnitedHealth Group Inc (UNH.N) fell by double digits. The S&P healthcare index .GSPA fell 5.1 percent.
