Fears over banking rules weigh on US

US stocks ended little changed yesterday as worries about bank regulation and a setback for drug company Pfizer offset signs of improvement in the labor market and services sector.

Pfizer, the world’s largest drugmaker, fell 1.6 per cent after its Alzheimer’s drug did not meet the main goals of a late-stage clinical trial, weighing on the Dow industrials.

The latest draft proposals to regulate the financial sector, including provisions to stop proprietary trading at banks, pressured financials, while investors worried over President Barack Obama’s attempts to revive his healthcare overhaul.

“He came across as saying he’s going to do whatever it takes to get his agenda through, and obviously that agenda has been viewed as theoretically negative for a lot of sectors in equities,” Dave Lutz, managing director at Stifel Nicolaus in Baltimore.

The Dow Jones industrial average slipped 9.22 points, or 0.09 per cent, to 10,396.76. The Standard & Poor’s 500 Index gained 0.48 points, or 0.04 per cent, to 1,118.79. The Nasdaq Composite Index lost 0.11 points to 2,280.68.

Stocks rose initially after the Institute for Supply Management’s gauge of service sector activity and ADP’s report on private employment pointed to a strengthening economy and a stabilising labor market. The main focus for investors will be Friday’s Labor Department data on unemployment in February.

That view of steady improvement was reinforced by the Federal Reserve, which said economic activity strengthened modestly across most of the 12 Fed districts during February, according to its Beige Book summary.

Big pharmaceutical companies Merck & Co, down 0.5 per cent to $37.21, and Pfizer were among the biggest drags on the Dow industrials. However, health insurers ended higher, with the Healthcare Payor index up almost one per cent.

Adding to the market’s jitters, draft language on the so-called “Volcker rule” from the Obama administration suggested US banks would be banned from proprietary trading and other large financial firms would face limits on such activity.

Financial company stocks lost ground, with the KBW Bank index down 0.4 per cent. Goldman Sachs, which has a large proprietary trading business, fell 0.6 per cent to $157.72.

Semiconductor stocks were also a drag on the market. The PHLX Semiconductor index fell 0.9 per cent, with SanDisk Corp, down 2.1 per cent to $31.80.