UnitedHealth's Big Day Sends the Dow to Huge Gains

Pfizer also helps health care's big day.

Feb 24, 2014 at 2:31PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The markets have gone on a tear to kick off the new week, with the Dow Jones Industrial Average (DJINDICES:^DJI) up more than 175 points as of 2:30 p.m. EST. Propelled by the large majority of its 30 blue-chip stocks, the index is inching back toward its record high set last year. UnitedHealth Group (NYSE:UNH) was up 3.6% as the big winner in a huge day for health insurance stocks across the country, while fellow Dow health care giant Pfizer (NYSE:PFE) has also picked up steam. Let's catch up on what you need to know.

Medicare cuts don't faze investors
UnitedHealth investors got a scare at the end of last week when the Obama administration announced proposed cuts to Medicare payouts in 2015. However, many industry observers had expected deeper reductions to the payments, particularly to Medicare Advantage, where the administration's cuts likely will amount to a 3.55% rate slash for next year. That's at the low end of what Humana (NYSE:HUM), one of UnitedHealth's top rivals and one of the leading Medicare Advantage providers, had anticipated. That was good enough to spike shares across the industry.

Make no mistake, the rate cut will hit Medicare performance at UnitedHealth, Humana, and other top insurers in a big way next year, making potential rising costs from Obamacare's rollout all the more painful. With roughly 30% of Medicare subscribers enrolled in Medicare Advantage plans, a substantial amount of business at the largest insurers is under fire. However, even these newly announced reductions aren't final: expect a big push by the industry and other concerned parties to pull back those reductions. By the time April rolls around, final cuts to Medicare could end up much smaller. In the end, UnitedHealth and its rivals still look strong heading into 2015.

Pfizer's stock has rallied by 1.4% after the company announced that a new study for its Prevnar 13 childhood pneumonia vaccine showed the drug's prevention of pneumonia in elderly patients aged 65 and up in a study of more than 85,000 patients. It's potentially a mammoth win for Pfizer and its top vaccine, which counts annual sales of more than $4 billion. Analysts have projected that expanded usage for the vaccine in battling pneumonia could send annual revenue soaring to more than $5 billion.

Finally, Microsoft's (NASDAQ:MSFT) stock is among the Dow's worst today with a 0.34% drop. Microsoft today announced a 70% price cut for its Windows 8.1 operating system as competition puts pressure on this usually dominant OS maker. Windows 8 has struggled to catch on with users as fast as previous iterations of the ubiquitous Windows OS, even though more than 200 million subscriptions to the software have been sold since its launch, according to Microsoft. The company has angled its latest operating system to take advantage of the mobile rise and the fall of the PC segment. But with plenty of options for selective users in the OS space, Microsoft will have to appeal to price-conscious buyers to keep up.

Is your portfolio ready for the market's moves?
Millions of Americans have waited on the sidelines since the market meltdown in 2008 and 2009, too scared to invest and put their money at further risk. Yet those who've stayed out of the market have missed out on huge gains and put their financial futures in jeopardy. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends UnitedHealth Group. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers