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Stock rally sputters after vote on healthcare bill is delayed

Stock rally sputters after vote on healthcare bill is delayed
The Wall Street entrance of the New York Stock Exchange. (Richard Drew / Associated Press)

U.S. stock indexes gave up an early rally and ended mostly lower Thursday after Republicans delayed a vote on their healthcare bill and left investors concerned about delays for President Trump's business-friendly agenda.

The Dow Jones industrial average was up as much as 96 points just before 1 p.m. Eastern Time, but doubts cast a shadow over the market as hard-line conservatives said they didn't support the bill. Healthcare stocks turned lower.

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Several advertisers' step back from YouTube hurt Alphabet, Google's parent company. Smaller companies did better than the rest of the market and more stocks rose than fell, signaling that investors are still confident in the U.S. economy.

Near the close of trading, House Republican leadership postponed a vote on the American Health Care Act because of a lack of support. Conservatives and more moderate Republicans had opposing concerns about the bill, which is widely disliked by House Democrats.

Jamie Cox, managing partner for Harris Financial Group, said investors are worried about how the Republican-controlled Congress and White House will come together on issues including tax reform, a debt ceiling increase, and a boost in infrastructure spending.

"If the Republicans are having such a difficult time making changes to something they universally agree upon, how on Earth are they going to agree on the more complicated tax cut that is coming through later in the year?" Cox said. Still, the losses were small, suggesting investors think some of those proposals will be delayed rather than abandoned.

The Standard & Poor's 500 index fell 2.49 points, or 0.1%, to 2,345.96. The Dow fell 4.72 points to 20,656.58. The Nasdaq composite fell 3.95 points, or 0.1%, to 5,817.69. The Russell 2000 index, which tracks smaller companies, rose 7.83 points, or 0.6%, to 1,353.43.

Bond prices edged down. The yield on the 10-year Treasury note, which has skidded over the last few days, rose to 2.42% from 2.40%. That modest increase gave banks and other financial companies a lift.

The S&P 500 banking index had plunged 5% over the previous four days as bond yields and interest rates decreased. Banks turned higher Thursday. SunTrust Banks rose 1.2% to $54.85 and Huntington Bancshares rose 1.9% to $13.02.

Alphabet fell 1.2% to $839.65 as a YouTube advertising boycott spread. Companies including Johnson & Johnson, AT&T and Verizon have suspended their YouTube ad campaigns in the last week because their ads were appearing alongside offensive videos, including some that promoted terrorism. The ads are placed automatically. Google has said it will do more to block offensive videos. YouTube is one of the fastest-growing parts of Google's ad system.

Technology companies lagged behind the rest of the market. Alphabet is the second-most valuable company in the S&P 500 after Apple.

Companies that run Medicaid programs, such as Molina Healthcare and Centene, stumbled in afternoon trading, and health insurance companies such as UnitedHealth and Humana took small losses. Drug companies also fell. Hospital operators rose, as did medical device makers.

Cox, of Harris Financial, said stocks probably won't fall much further if the healthcare bill ultimately fails because investors will focus on other items on Trump's agenda.

"The market doesn't care a bit about the healthcare legislation," he said.

PVH, which owns Calvin Klein and Tommy Hilfiger, jumped 8.5% to $98.55 after its fourth-quarter profit and sales topped analyst estimates. It said sales for the Hilfiger brand grew in the latest quarter and its business is doing well in spite of high discounts in the U.S.

Discount retailer Five Below climbed 10.8% to $42.25 after it surpassed Wall Street projections in its fourth quarter. Retailers have struggled in recent months, but consumer-focused companies did better than the broader market Thursday. Nike, which plunged 7% a day earlier, rose 2.7% to $55.37.

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U.S. crude oil fell 34 cents to $47.70 a barrel in New York. Brent crude, used to price international oils, slipped 8 cents to $50.56 a barrel in London. That pulled energy companies lower.

Wholesale gasoline fell 1 cent to $1.59 a gallon. Heating oil fell 1 cent to $1.49 a gallon. Natural gas rose 4 cents to $3.05 per 1,000 cubic feet.

Gold fell $2.50 to $1,247.20 an ounce, which ended a five-day win streak. Silver rose 2 cents to $17.59 an ounce. Copper rose 1 cent to $2.64 a pound.

The dollar inched up to 111.07 yen from 110.92 yen. The euro fell to $1.0786 from $1.0798.

Germany's DAX jumped 1.1% and the CAC 40 in France rose 0.8%. Britain's FTSE 100 index rose 0.2%. In Japan the Nikkei 225 gained 0.2%. Hong Kong's Hang Seng was flat and the South Korean Kospi gained 0.2%.

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UPDATES:

3 p.m.: This article was updated with closing prices, context and analyst comments.

This article was originally published at 7 a.m.

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