US open: Markets take a breather while health stocks fall on plans to repeal Obamacare

US equity markets were little changed on Tuesday as investors took a breather following recent gains, but health stocks were on the back foot on plans to repeal Obamacare and the dollar gained.

At 1540 GMT, the Dow Jones Industrial Average and S&P 500 were flat at 20,958.69 and 2,373.62, while the Nasdaq was up 0.12% to 5,856.49.

Meanwhile, West Texas Intermediate was up 0.52% to $53.48 per barrel and Brent crude rose 0.44% to $56.26.

On opening, the S&P 500's healthcare sector led losses after the Republican party unveiled plans to dismantle the Affordable Care Act, dubbed Obamacare. The plans would shrink the government's role in healthcare by scrapping the requirement for most people to have health insurance and roll back extra funding for the poor.

Ionis Pharmaceuticals fell 2.71%, Sage Therapeutics was down 1.48%, Merck & Co was 0.68% weaker and Pfizer shaved off 0.99%.

Connor Campbell, financial analyst at Spreadex, said: “The president once again caused a headache for the pharmaceutical stocks, tweeting that ‘pricing for the American people will come way down’ in regards to drugs. This helped prevent the Dow Jones from doing much after the bell, the likes of Merck and Pfizer both taking a hit. The dollar, on the other hand, remained strong”.

In currency markets, the dollar was up 0.39% versus the pound to 0.8204. Oanda's Craig Erlam said sterling was under pressure as Prime Minister Theresa May's difficulty in passing the Brexit bill smoothly through the House of Lords – potentially leading to delays in triggering article 50 without concessions – and some weaker economic data weighed on the currency.

The greenback was 0.11% firmer against the euro to 0.9461 and up 0.18% versus the yen to 114.09.

On the data front, the trade deficit jumped to $48.5bn in January from $44.3bn, in line with the consensus forecast, $48.5bn.

Imports rose to $197.6bn in January from $192.6bn the previous month , while total imports increased by $5.3bn to $240.6bn. The surplus on the services balance slipped to $21.2bn from $21.4bn.

Meanwhile, as investors bet the Fed will hike rates at its meeting next week, the focus will shift to the release of the non-farm payrolls report at the end of the week for signs of continued growth, with analysts expecting the US economy to have added 186,000 jobs last month. The unemployment rate and wage growth components will also be watched closely.

In corporate news, Jack Daniel’s whiskey parent Brown-Forman Corp was down 2.21% after it reported that profit fell short of expectations and it cut its outlook for the year.

Dick’s Sporting Goods slumped 7.66% despite the retailer posting better than expected fourth-quarter results.

Michaels Companies gained 2.92% after the arts and crafts retailer beat fourth-quarter earnings forecasts and gave an upbeat outlook for 2017.

Snapchat owner Snap was down 7.74% for the second consecutive day following its IPO last Thursday.