The Dow Jones Industrial Average (^DJI 0.41%) broke through the 27,000 level for the first time on Thursday, finishing at 27,088.08 for a new record. The S&P 500 (^GSPC 0.56%) also had a record close, stopping a hair short of 3,000 to end the session at 2,999.91.
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As for individual stocks, Delta Airlines (DAL -1.71%) reported a strong quarter, while CVS Health (CVS 1.23%) rose on news the White House is dropping a plan that could have hurt its profits.
Delta flies higher
Delta Airlines flew past expectations for the second quarter, thanks to strong demand and efficiency improvements, and shares rose 1.2%. Revenue was $12.5 billion, slightly ahead of analysts' consensus estimate and up 8.7% on an adjusted basis. Earnings per share increased 32% to $2.35, coming in at the top end of the company's guidance and better than the $2.25 analysts were expecting.
Delta grew capacity by 4.7% from the period last year and was still able to collect 3.8% more revenue per available seat mile. The airline had a 10% increase in premium ticket sales, a 10% gain in revenue from loyalty travel awards, and 17% growth in travel-related services. Delta was able to fill its planes as competing airlines were impacted by the grounding of the Boeing 737 MAX, achieving a record quarterly load factor of 88%, up from 86.7% in Q2 last year.
Delta expects continued strength and high customer satisfaction through the summer travel season, and guided to Q3 EPS of $2.10 to $2.40, compared with the analyst consensus estimate of $2.13.
CVS Health gets a reprieve
Shares of CVS Health jumped 4.7% on news the Trump administration is abandoning its plan for an executive order that would have curtailed rebates that drug manufacturers pay pharmacy benefit managers (PBMs) in return for winning placement of high-priced products on lists of drugs that insurers cover with affordable co-pays. CVS is vertically integrated, with its Aetna heath insurance unit, its Caremark PBM, and retail pharmacies.
The order was intended to direct drug discounts to patients rather than PBMs and was part of the administration's strategy to lower drug costs. But the plan was strongly supported by drug companies, who might have responded by simply eliminating the discounts and pocketing the money themselves. For now, the unpopular middlemen of the drug industry have dodged a bullet.
CVS shares may have also benefited from a recent report from the Brightfield Group that highlighted how mass retail chains such as CVS will eclipse all other channels in skyrocketing sales of hemp-derived cannabidiol (CBD). The report said that the CBD market will grow to $23.7 billion by 2023.