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Stock Watch

Dow Suffers Its Worst Day of 2018 on Health Sector Scare

Amazon, JPMorgan and Warren Buffett's Berkshire threaten to disrupt health care -- and disrupt the stocks market in the process on Tuesday.

A blockbuster announcement that Amazon.com (AMZN), JPMorgan Chase (JPM) and Warren Buffett's Berkshire Hathaway (BRK.B) would team up on a broad health-care initiative wreaked havoc on the sector and spilled over into the broader stock market. The Dow tumbled 1.4% on Tuesday, Jan. 30, to finish at 26,076. It was the industrial average's first one-day decline of 100 points or more in 2018.

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What Happened in the Stock Market Today?

Amazon, Berkshire and JPMorgan collectively said in a press release Tuesday that "they are partnering on ways to address healthcare for their U.S. employees, with the aim of improving employee satisfaction and reducing costs." The surprise announcement included few details, but that didn't stop investors from fleeing out of fear that Amazon will do what it does when it enters a new market: Batter the competition. Dow components UnitedHealth Group (UNH) and Pfizer (PFE) fell 4.3% and 3.2%, respectively, to help lead the Health Care Select Sector SPDR ETF (XLV) 2.1% lower.

A piece of advice to investors in health care or any other sector: Keep your heads. The Dow has gained roughly 5% in a month -- and that's including Tuesday's losses. The occasional down day is a normal part of any bull market, especially when stocks have advanced this quickly and become this expensive. If you really want to start thinking about defense, consider a few funds that provide protection against a bear market. However, opportunists searching for dips to buy should look beyond today's broad one-day decline and focus on the high-yield dividend space, which is rife with bargains after getting beat up over the past couple of months.

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