It is the last Friday of July and the U.S. stock market is slightly in the red as shares of British American Tobacco (BTI, Financial), Altria Group Inc. (MO, Financial) and Philip Morris International Inc. (PM, Financial) are losing ground.
The Food and Drug Administration announced a new plan today aimed at reducing nicotine in cigarettes to non-addictive levels. Since almost nine out of 10 adult smokers started the habit before age 18, the regulation is aimed at reducing the probability of future generations becoming addicted and to make more smokers quit. The idea is to protect children and significantly reduce tobacco-related diseases, especially death. The nicotine is the main focus of this regulation, having the appropriate scientific and regulatory foundations for an efficient implementation.
Tobacco is a major cause of illness in the U.S. There are more than 480,000 deaths per year related to tobacco use. In addition to the severe health consequences of smoking, tobacco also causes significant financial costs, about $300 billion a year in direct medical care and lost productivity costs.
FDA Commissioner Scott Gottlieb said, “The overwhelming amount of death and disease attributable to tobacco is caused by addiction to cigarettes – the only legal consumer product that, when used as intended, will kill half of all long-term users…Unless we change course, 5.6 million young people alive today will die prematurely later in life from tobacco use. Envisioning a world where cigarettes would no longer create or sustain addiction, and where adults who still need or want nicotine could get it from alternative and less harmful sources, needs to be the cornerstone of our efforts – and we believe it’s vital that we pursue this common ground.”
Other stocks affected by the news are Vector Group (VGR, Financial), Turning Point Brands (TPB, Financial), Gilla (GLLA, Financial) and Imperial Brands (IMBBY, Financial), whose shares have all declined.
In other news, the U.S. economy accelerated in the second quarter as consumers increased spending and companies invested in equipment. The GDP increased at an annual rate of 2.6% in the second quarter. The figure included a boost from international exchange, according to Commerce Department statements on the first estimate of the American GDP.
Meanwhile, the euro continues on the growth path. The French GDP increased 0.5% in the second quarter (the biggest expansion since 2011), while growth in Spain and Austria was 0.9% in the same quarter.
Disclosure: The author holds no position in any stocks mentioned.
