Skip to main content

Stock market’s recovery is led by drugmakers

By WTOP Staff

STEVE ROTHWELL
AP Markets Writer

NEW YORK (AP) — For stocks, it’s just what the doctor ordered.

Health care companies are leading the market’s rebound from a sharp sell-off two weeks ago, helping push the Dow Jones industrial average and Standard & Poor’s 500 index back to record levels.

The industry, which is made up of a range of companies, from global drugmakers like Pfizer to insurers like UnitedHealth, has risen 11.2 percent since October 15, when the stock market’s recent slump hit bottom. That is a bigger rise than the 8.4 percent gain for the broader market.

The sector’s surge has been driven by its strong third-quarter earnings.

About two-thirds of companies in the S&P 500 have now turned in results, and the health care industry is on track to have the best earnings growth, according to data from Estimize, a company that gathers forecasts from a range of financial professionals.

Average earnings growth for the sector is forecast to come in at 14 percent for the period, higher than growth of 11.7 percent for all companies in the index. Sales are also booming, with sector revenue expected to rise 12 percent for the quarter, above the 4.5 percent growth overall.

Celgene has been one of the best-performing health care stocks in the S&P 500 since the market slump ended Oct. 15. Shares of the biotechnology company have surged 24 percent since the bottom, helped by a strong earnings report last month that showed double-digit sales growth. The company is also confident about its drugs in development.

Health care stocks, which also include medical device makers and hospital owners, have been an investor favorite for some time. The sector is up 21 percent in 2014, and is on track to outperform the broader market for the fourth straight year.

What’s driving the streak? Aging populations in the developed world mean more money is being spent on medicines and treatments.

Health care spending is forecast to grow at an average of 5.7 percent in the 10 years from 2013 to 2023, 1.1 percentage points faster than the overall growth rate for the economy, according to estimates from the Centers for Medicare and Medicaid Services. The U.S. now spends close to 20 percent of its gross domestic product on health care, compared with 14 percent twenty years ago, according to World Bank figures.

Within the sector, some big drug companies are attractive to investors because they pay a large dividend relative to the average S&P 500 company.

AbbVie, for example, has a healthy yield of 3.1 percent compared with 2 percent for the broader market. The yield shows how much a company pays out in dividends each year relative to the price of its stock.

The company is also benefiting from a strong business. The stock surged Friday after it reported third-quarter earnings that were better than analysts forecast. The maker of Crohn’s disease treatment Humira also raised its earnings outlook for the second time this year.

The company has seen its stock price jump 16 percent since the end of the slump.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related News

Frustration grows in Venezuela as earthquake death toll reaches 1,430

Israel and Lebanon sign framework agreement with US in ‘first step’ toward peace, Rubio says

Trump-endorsed populist poised to become Colombia’s next president as rival challenges vote