Surging health care stocks lifted the Dow Jones Industrial Average on Thursday above 27,000 for the first time as the White House backtracked on a proposed rule to eliminate rebates that flow from drugmakers to middleman pharmacy benefit managers. The S&P 500 also closed at a record high.

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The proposed rule, which was projected to raise federal spending by $177 billion over the next decade, was poised to prohibit drug rebates for treatments offered in the Medicare and Medicaid programs beginning in 2020.

It drew intense backlash from pharmacy benefit managers (PBM), whose operations would have been significantly curbed by the action, and praise from drug companies that routinely blast PBMs as profiting off of the arrangement.

Investor sentiment was also buoyed by optimism that the Federal Reserve will cut interest rates at their July 31 meeting.

Following several days of uneven trading activity over concerns that the Federal Reserve would withhold moving forward on the expected cuts, investors were optimistic after Powell’s remarks that the central bank’s outlook for the U.S. economy is weighed down by trade tensions.

Many Federal Open Markets Committee participants “saw that the case for a somewhat more accommodative monetary policy had strengthened," he said in prepared testimony for the House Financial Services Committee.

Powell was back on Capitol Hill for a second round of testimony on Thursday, this time before the Senate. Powell also said a strong June jobs report did not change the central bank's economic outlook or policy on interest rates.

Meanwhile, investors are eagerly awaiting a July 31 policy meeting to see if the Federal Reserve moves forward with the rate cuts.

Wall Street's optimism was also reflected in rising bond yields. The yield on the 10-year Treasury rose 0.06 percent to 2.12 percent, its third consecutive daily gain and its fourth gain in the past five trading days. Because bond yields move in the opposite direction of bond prices, rising yields signal falling demand for bonds

Ticker Security Last Change Change % I:DJI DOW JONES AVERAGES 27080.64 +265.20 +0.99% SP500 S&P 500 3287.24 +40.65 +1.25% I:COMP NASDAQ COMPOSITE INDEX 10875.911164 +203.64 +1.91%

Crude oil and gold prices fell. West Texas Intermediate, the benchmark U.S. crude slipped to $60.38 per barrel. The decline came despite massive evacuations of workers from oil rigs in the Gulf of Mexico where Tropical Storm Barry is barreling toward Louisiana and could become the first name hurricane of the season.

Gold fell 0.21 percent to $1,409.50 per ounce.

Shares of technology companies reacted after the French government on Thursday approved a new tax on those firms amid a probe into the measure by the U.S. government. The upshot left the tech-heavy Nasdaq Composite with a slight loss for the day.

Ticker Security Last Change Change % FB FACEBOOK INC. 254.10 +4.57 +1.83% GOOGL ALPHABET INC. 1,437.00 +14.14 +0.99% TWTR TWITTER INC. 43.61 +0.45 +1.05% AMZN AMAZON.COM INC. 3,081.55 +61.76 +2.05%

The 3 percent tax on "digital services" companies with roughly $845 million in global revenue and $281 million in digital sales in France will take effect retroactively to the start of 2019.

Shares of Delta Air Lines surged on better-than-expected results for the second quarter. Profits at the Atlanta-based carrier rose 32 percent to $2.35 per share, as revenue grew to $12.5 billion.

UnitedHealth Group stocks surged along with other pharmacy benefit managers after President Trump abandoned a proposal that would have overhauled the rebates that are collected.

Ticker Security Last Change Change % DAL DELTA AIR LINES INC. 29.59 +0.58 +2.02% UNH UNITEDHEALTH GROUP INCORPORATED 300.22 +7.42 +2.54% CI CIGNA CORP. 161.73 +0.74 +0.46% MRK MERCK & CO. INC. 82.50 -0.67 -0.80%

Last month, President Trump and Chinese President Xi Jinping agreed to relaunch trade talks after negotiations fell apart in May.

In economic news, initial claims for state unemployment benefits declined 13,000 to a seasonally adjusted 209,000 for the week ended July 6, the lowest level since April, the Labor Department said.

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Top White House officials had “constructive” talks with Chinese Vice Premier Liu He and Minister Zhong Shan earlier this week and a face-to-face meeting is possible.