UnitedHealth and Microsoft Overcome the Dow's Dive

Wall Street backs off from record highs as UnitedHealth surges behind earnings optimism.

Jul 17, 2014 at 2:30PM
Daily Fool

The market has swooned today as the Dow Jones Industrial Average (DJINDICES:^DJI), coming off yesterday's new record high, has dipped into the red. As of 2:20 p.m. EDT, the Dow has dropped 80 points, with all but a handful of Dow stocks taking a hit on the day. Earnings season races on, and UnitedHealth Group (NYSE:UNH) has stood out as a winner, riding earnings optimism to the top of the Dow. Fellow Dow riser Microsoft (NASDAQ:MSFT) has put in a good day of its own following the latest cost-cutting reports. Let's catch up on what you need to know.

UnitedHealth hits the mark
UnitedHealth hit the gas in the second quarter: The market's biggest insurer grew revenue by 7%. The company's earnings fell by 2% year over year in Q2, but UnitedHealth topped analyst expectations and has pushed its stock higher by 2.5% so far. Optimism around Obamacare's future convinced the company's leadership to boost the bottom end of its full-year profit guidance and raise its 2014 revenue outlook slightly. Even better for long-term investors, UnitedHealth pushed its dividend higher by 30%.

The expansion of Medicaid has been a huge growth-driver for top insurers in 2014, and UnitedHealth rallied again around that trend in the second quarter. The company's Medicaid enrollment climbed by almost 19%, with 380,000 new members signing up for plans. That strong result has UnitedHealth vowing to expand in 2015 to more government-run exchanges in the new Obamacare landscape, with the company looking to participate in up to two dozen states. Rising medical costs were to be expected with the growth in membership, as medical expenses jumped by 6%, but regardless, UnitedHealth turned in a stellar second quarter.


Source: Microsoft.

Microsoft's stock has also helped the Dow stave off even worse losses today after the tech giant announced it will slash as many as 18,000 jobs -- or around 14% of its employees -- over the course of the next year. CEO Satya Nadella is looking to slim Microsoft down as it absorbs assets it acquired from Nokia, with the cuts likely to shave personnel in areas overlapping with Nokia's device unit.

Wall Street has reacted well to the news, with Microsoft's stock jumping 1.5% this afternoon. Many analysts have urged the company to streamline its structure and save costs, particularly as Microsoft looks to dive into higher growth and highly competitive segments such as mobile. Overall, Nadella projects that the company will take up to $1.6 billion in charges through the coming year as Microsoft absorbs Nokia's units and builds up its mobile portfolio. The cuts were virtually inevitable, however, as the company announced at the time of the Nokia purchase that it aimed to slash $600 million in costs in the 18 months following the major acquisition. So far, it looks like Microsoft is on track.

Leaked: The tech world's shocking new smart device you can't ignore
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

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