Sector Update: Health Care Stocks Fall Friday

US benchmark equity indexes ended lower Friday as markets analyzed the latest reading of the Federal Reserve's preferred inflation metric, as well as corporate earnings.

* Official data showed that US consumer spending growth accelerated at the end of 2024, while the Fed's preferred inflation gauge held steady at the annual level.

"Despite the tamer price and wage figures, robust consumer spending and uncertain trade policies will likely keep the Fed sidelined in the months ahead," BMO Capital Markets said in a note.

* Fed Governor Michelle Bowman said that policymakers should take a "cautious and gradual" approach to adjusting monetary policy amid upside risks to inflation.

* "In light of the ongoing strength in the economy and with equity prices substantially higher than a year ago, it seems unlikely that the overall level of interest rates and borrowing costs are exerting meaningful restraint," Bowman said.

* March West Texas Intermediate crude oil closed down $0.19 to settle at $72.54 per barrel, while March Brent crude, the global benchmark, was last seen down $0.10 to $76.77 as traders awaited clarity on whether the Trump Administration will include oil products in its plan to begin imposing 25% tariffs on imports from Canada and Mexico on Feb.1.

* AbbVie posted better-than-expected Q4 results Friday amid robust sales of Skyrizi and Rinvoq, prompting the drugmaker to lift its long-term combined revenue outlook for the two immunology drugs. Its shares were up 5.4%.

* Warner Bros. Discovery and Cutting Edge Group said Friday they have formed a joint venture to co-own and manage Warner's huge catalog of film and TV music. Warner Bros. shares were down 1.7%.

US benchmark equity indexes were lower ahead of Friday's close as traders assessed the latest reading of the Federal Reserve's preferred inflation metric, as well as corporate earnings.

The Dow Jones Industrial Average was down 0.8% at 44,519.7, while the S&P 500 fell 0.6% to 6,033.1. The Nasdaq Composite lost 0.5% to 19,579.3. Barring communication services, all sectors were lower, led by energy.

Official data showed that US consumer spending growth accelerated at the end of 2024, while the Fed's preferred inflation gauge held steady at the annual level.

The US 10-year yield was up 6.9 basis points at 4.58%, while the two-year rate added 3.9 basis points to 4.24%.

Shares of Deckers Outdoor slumped after the company reported its latest quarterly financial results, while Atlassian and AbbVie surged.

West Texas Intermediate crude oil was down 0.3% at $72.48 a barrel.

Walgreens Boots Alliance's shares were sliding intraday Friday following the company's decision to suspend its dividend, though RBC Capital Markets sees the move potentially accelerating the drugstore chain's turnaround plan.

Walgreens said late Thursday that the decision comes as it continues to assess its capital allocation policy. "The company's cash needs over the next several years, including with respect to litigation and debt refinancing, were important considerations as part of the decision to suspend the dividend," Walgreens said in a statement.

Its shares were down 10% in Friday late-afternoon trade.

The company said it aims to paring debt and improve free cash flow as it works toward achieving "a retail pharmacy-led turnaround underpinned by a sustainable economic model."

Walgreens continues to "evaluate the appropriateness and size" of its dividend, Chief Financial Officer Manmohan Mahajan said on an earnings conference call earlier this month, according to a FactSet transcript.

In the light of Mahajan's remarks, the company's decision to suspend its dividend is not surprising, RBC analyst Ben Hendrix said in a note e-mailed Friday. The move is expected to put Walgreens in a better financial position to execute its turnaround plan in a more timely manner and save about $865 million annually, according to the note.

Separately, Truist Securities on Friday lowered its price target on the Walgreens stock to $12 from $13 while maintaining its hold rating.

Toward the end of 2024, The Wall Street Journal reported that the drug-store operator was in discussions to sell itself to private-equity firm Sycamore Partners.

"Our priority for fiscal 2025 is to stabilize our core performance while we make progress on the longer term strategic and operational turnaround," Mahajan said on the conference call to discuss fiscal first-quarter results.

Health care stocks were higher Friday afternoon, with the NYSE Health Care Index adding 0.1% and the Health Care Select Sector SPDR Fund (XLV) up 0.2%.

The iShares Biotechnology ETF (IBB) rose 0.2%.

In corporate news, AbbVie reported better-than-expected Q4 results amid robust sales of Skyrizi and Rinvoq, prompting the drugmaker to lift its long-term combined revenue outlook for the two immunology drugs. Its shares popped 5.4%.

Walgreens Boots Alliance shares fell 7.8%. The company said Thursday its board has suspended quarterly dividend payments while management refines its capital allocation policy to be consistent with a long-term turnaround strategy.

AstraZeneca has cancelled a plan to invest 450 million pounds ($558.3 million) in a UK vaccine plant in Liverpool. Its shares were down 0.4%.