Please ensure Javascript is enabled for purposes of website accessibility

How UnitedHealth Cured the Dow on Tesla's Big Day

By Dan Caplinger - Apr 1, 2013 at 8:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Dow's losses were cut to almost nothing as the health insurer soared.

Stock market investors have seen a number of days recently that look a lot like what happened today. After jumping to a modest early gain, the Dow Jones Industrials (^DJI 1.76%) gave up ground and by midday was trading down by more than 45 points. But in the final half-hour of trading, the stock market climbed back and finished down just six points, as investors apparently chose to focus on more optimistic sentiment like their views for the coming earnings season. Broader markets stayed mired in bigger losses, as the Nasdaq fell almost 1% and the S&P 500 gave up half a percent.

UnitedHealth (UNH 0.97%) was a big contributor to the late recovery, soaring more than 3% and adding further gains after hours immediately following the close. Along with Humana, UnitedHealth got hit hard last month on news that reimbursement rates for Medicare Advantage plans might fall, because the two companies rely heavily on such reimbursements as part of their overall business. But with a ruling imminent, investors have apparently had second thoughts about whether the Centers for Medicare and Medicaid Services will follow through on those cuts, as Humana spiked up almost 9%.

Elsewhere, Tesla Motors (TSLA 7.33%) finished the day up 16%. The company announced guidance for a surprise profit in the first quarter, proving the success of Tesla's Model S electric vehicle. The big question going forward for the automaker, however, is whether there's enough demand for its high-end niche products to drive sales forward as much as Tesla needs in order to justify its current stock valuation. Meanwhile, bigger competitors are waiting in the wings to see if Tesla's experiment succeeds, and if it does, then you can expect copycats from all corners to meet the demand that Tesla will have produced.

Finally, GameStop (GME 6.81%) soared more than 6% on hopes that new versions of the PlayStation and Xbox will prompt a new round of purchases of the console-based video games that GameStop has traditionally relied on. Although many analysts have expected online games to continue displacing much more expensive stand-alone console games, GameStop has nevertheless held up well, thanks largely to sales of popular blockbuster series installments. For GameStop to succeed, those consoles will have to draw substantial interest -- something that's far from certain right now.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$33,212.96 (1.76%) $575.77
UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
UNH
$507.11 (0.97%) $4.88
Tesla, Inc. Stock Quote
Tesla, Inc.
TSLA
$759.63 (7.33%) $51.90
GameStop Corp. Stock Quote
GameStop Corp.
GME
$137.21 (6.81%) $8.75

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.