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UnitedHealth Dashes, HP Crashes

By Jeremy Bowman - Updated Nov 17, 2016 at 4:24PM

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The Dow set a new record again as strong manufacturing data and a lift in Medicare payments boosted stocks.

The Dow Jones Industrial Average (^DJI 1.61%) and S&P 500 touched new record highs today led by the health-care sector, which jumped following a surprise increase in Medicare Advantage payout rates.

The Dow crossed 14,600 for the first time, gaining 0.6% or 89 points, to finish at 14,662. After hours yesterday, the Center for Medicare and Medicaid Services reversed earlier signals that it would lower Medicare Advantage payouts by 2.2% and instead decided to raise them 3.3%. Not surprisingly, health-insurance stocks rallied across the board, with UnitedHealth Group (UNH 0.83%) gaining 4.7% to lead all Dow stocks. Humana, which is heavily dependent on Medicare payouts, jumped 5.5%, and Aetna gained 3.7%.

Factory orders for February were also better than expected, increasing 3% on expectations of 2.6%. January orders were also revised upward from -2% to -1%. On a similar note, auto sales from the Big Three hit their best sales level in five years in March on higher demand for fuel-efficient vehicles and pick-up trucks.

Not all stocks made headway today, though. Hewlett-Packard (HPQ 3.37%) sank 5.2 % after Goldman Sachs downgraded the PC-maker to "sell" from "hold." The investment bank said HP may be overbought after its recent run-up, adding that investors may be overly hopeful for a turnaround, considering its key PC and printer businesses continue to decline. Goldman also that HP will have to invest much of its cash flow in research and development, putting a further strain on profits.

Elsewhere, Procter & Gamble (PG 0.88%) moved up 1.6% after the consumer-goods giant said it had achieved zero waste in 25% or 45 of its manufacturing facilities worldwide, with another 20 soon to meet the sustainable standard. P&G now uses 99% of materials that enter its factories, and the news serves as a reminder that P&G continues to innovate and lets consumer know they can feel good about buying P&G products.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
$32,637.19 (1.61%) $516.91
HP Inc. Stock Quote
HP Inc.
$36.77 (3.37%) $1.20
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
$146.48 (0.88%) $1.27
UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
$502.23 (0.83%) $4.14

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

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