Dow Falls 3.12, While Nasdaq Slides 4.15

A sharp sell-off in health care companies far outweighed gains in technology and other sectors. Smaller company stocks fell more than the rest of the market.

Insurers drove the health care sector slide for the second straight day. Investors fear the potential impact on profits from health reform ideas being discussed in Washington and on the presidential campaign trail.

Qualcomm led the gainers in the technology sector. Intel climbed after pulling out of the smartphone modem market. And T-Mobile and Sprint slumped on reports the Justice Department is questioning their proposed merger.

PepsiCo and Morgan Stanley rose after delivering better than expected quarterly results Wednesday. IBM and Netflix fell a day after reporting their earnings.

Investors are poring over company earning reports this week, focusing on companies’ profit and revenue outlooks for the rest of this year. Analysts expect the first quarter results for S&P 500 companies overall to be the weakest in nearly three years.

“The market is in wait and see mode,” said Jamie Lavin, global investment specialist at J.P. Morgan Private Bank. “We’re only 10% through earnings season, but so far, so good.”

The S&P 500 fell 6.61 points, or 0.2%, to 2,900.45. The Dow Jones Industrial Average dropped 3.12 points, or less than 0.1%, to 26,449.54.

The Nasdaq composite slid 4.15 points, or 0.1%, to 7,996.08. The Russell 2000 index of small-cap stocks gave up 15.19 points, or 1%, to 1,567.60.

European stock indexes finished higher. Decliners outnumbered gainers on the New York Stock Exchange.

Bond prices held steady. The yield on the 10 year Treasury note remained at 2.59%.

The market has rebounded strongly from a steep sell-off late last year. The Federal Reserve helped spur the market’s rebound early this year when it said that it may not raise interest rates at all in 2019. The benchmark S&P 500 remains within 1.5% of its most recent all-time high on September 20.

Wednesday’s downbeat finish on Wall Street followed uneven trading in global markets, despite news that China’s economy grew at a better than expected 6.4% annual pace in the January-March quarter. The data suggests Beijing’s efforts to halt a slowdown are working, but its economy is still growing at the weakest pace since 2009.

Several health insurers helped pull the market lower. Anthem gave up 3.6%, Cigna lost 3.7% and UnitedHealth Group slid 1.9%.

The losses pulled the health care sector into the red for the year with a loss of 0.9%. The other 10 sectors in the S&P 500 are up for the year.

All told, health care has fallen 4.5% so far this week.

The decline is partly due to investors favoring cyclical growth sectors, such as materials, energy and technology, at the expense of less risky seeming stocks.

More recently, presidential politics has hurt the sector. Democratic presidential candidates such as Sen. Bernie Sanders of Vermont, who is emerging as the early fundraising front-runner, has been making the case for a “Medicare for All” plan that could replace private coverage.

“There is a growing perception that the popularity of universal health care is growing among the electorate, forcing investors to take notice as the odds of meaningful regulation increase,” Alec Young, managing director of global markets research at FTSE Russell, wrote in a research note Wednesday.

While the likelihood of a major health care overhaul remains relatively low, enough uncertainty exists that investors are now selling first and asking questions later, Young added.

Qualcomm led all stocks in the S&P 500, closing 12.2% higher. That adds to a 23% gain on Tuesday as traders welcomed news that the mobile chipmaker’s bitter legal dispute with Apple has ended. It centered on technology that enables iPhones to connect to the internet. Apple rose 1.9%.

In a related move, Intel climbed 3.3% after pulling out of the market for 5G smartphone modems. The company said it will focus on opportunities in computer modems and other devices.

Sprint and T-Mobile shares fell after a Wall Street Journal report cast doubt on the likelihood of government approval of the companies’ $26.5 billion merger.

The Journal said that Justice Department antitrust personnel reviewing the takeover questioned the companies’ reasoning for it in a meeting this month. Talks between regulators and the companies are ongoing, according to the report, which cited unnamed people familiar with the matter.

Sprint shares slid 6.2%, while T-Mobile dropped 2.2%.

Several companies rose Wednesday as traders welcomed their latest quarterly report cards.

PepsiCo shares climbed 3.8% after the soda and snack maker reported better than expected first quarter profit and said earnings at its Frito-Lay division were particularly strong.

Morgan Stanley rose 2.6% after delivering better than expected results.

United Continental Holdings added 4.8% after the airline’s first quarter profit doubled, beating forecasts as it carried more passengers and contained costs.

Railroad operator CSX gained 4% a day after it turned in quarterly results that topped Wall Street’s forecasts on a mix of volume growth and lower costs.

IBM slid 4.2% and Netflix dropped 1.3% a day after both companies reported their earnings.

Energy futures finished mostly lower Wednesday. Benchmark U.S. crude oil fell 0.5% to settle at $63.76 per barrel. Brent crude, the international standard, inched 0.1% lower to close at $71.62 per barrel.

Wholesale gasoline gained 0.5% to $2.04 per gallon, while heating oil lost 0.6% to $2.07 per gallon. Natural gas fell 2.1% to $2.52 per 1,000 cubic feet.

Gold was little changed at $1,276.80 per ounce, silver rose 0.2% to $14.93 per ounce and copper climbed 1.3% to $2.97 per pound.

The dollar strengthened to 112.07 Japanese yen from 111.99 yen late Tuesday. The euro rose to $1.1298 from $1.1288.