With the stock market near all-time highs, investors are on the lookout for places to invest spare cash. Thursday morning brought a brief break to the upward momentum on Wall Street, but declines for major market benchmarks were inconsequential. As of 10:15 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was down just 16 points to 34,917. The S&P 500 (SNPINDEX:^GSPC) gave up seven points to 4,367, while the Nasdaq Composite (NASDAQINDEX:^IXIC) fell just a single point to 14,644.
In good times and bad, blue chip stocks offer a level of stability and security that fit many investors' risk profiles. This morning, UnitedHealth Group (NYSE:UNH) and Taiwan Semiconductor Manufacturing (NYSE:TSM) weighed in with their latest financial reports, and even though their share prices were mixed, both companies have high-quality businesses with plenty of prospects for growth. Below, we'll look more closely at what each company said and how they see the future playing out.
A healthy health insurer
Health insurance giant UnitedHealth saw its stock ease lower by about half a percent at mid-morning after having been up during the premarket trading session Thursday. The company's second-quarter financial results showed just how resilient the healthcare industry has been even under highly challenging conditions.
UnitedHealth got good results throughout its business. Overall sales grew 15% year over year, with roughly equal top-line gains for the UnitedHealthcare insurance division and the Optum health services business segment. Adjusted earnings of $4.70 per share topped expectations, and the company increased its outlook for the rest of 2021.
Nevertheless, UnitedHealth's profits were down substantially from year-ago levels. That's largely because lockdowns during the second quarter of 2020 led to the near-elimination of routine doctor visits and non-essential medical procedures, and that in turn led to a huge decrease in healthcare claims activity during the year-ago period. Investors should expect future earnings to remain closer to current levels, as that one-time spike is highly unlikely to recur.
Investors see UnitedHealth's prospects remaining strong for the foreseeable future. With such a strong track record of handling the ever-shifting healthcare industry in the U.S., UnitedHealth has proven its ability to roll with the punches and maintain steady growth.
Chip shortages help Taiwan Semi
Elsewhere, Taiwan Semiconductor Manufacturing saw its stock drop 5%. The decline in the stock didn't seem consistent with the strong results the foundry had during the second quarter.
Taiwan Semi saw revenue jump nearly 20% year over year, which in part stemmed from the ongoing shortage of semiconductor chips that has affected so many industries across the stock market. Companies in the high-performance computing, mobile device, and automotive industries all rely on Taiwan Semi for its top-of-the-line 5-nanometer and 7-nanometer chip technology, and many of those companies have had to cut production and prioritize their needs because of their inability to get sufficient volumes of semiconductors.
However, what might have prompted the decline in the stock were comments from Taiwan Semi's CEO. C.C. Wei believes the company will continue to boost deliveries to customers in need, particularly in the auto industry. Because the semiconductor business is cyclical, investors are used to big swings between shortages and supply gluts, and any sign of such a reversal often comes with a hit to the share price.
Taiwan Semi shares had already doubled in just over a year's time, so a slight pullback isn't unwarranted. Nevertheless, the stock drop is a good reminder that even top companies can be vulnerable to cyclical swings in their businesses.