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How Obamacare Has Dinged the Dow This Morning

By Dan Caplinger - Apr 18, 2013 at 11:03AM

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Concerns about a slowing economy also pushed markets lower.

Negative sentiment on Wall Street has been building throughout the week, and this morning brought unwelcome news that the much-followed Leading Economic Index pointed to a potential drop in economic growth for the first time since last August. A rise in weekly claims for unemployment benefits also added to the economic gloom, helping to send the Dow Jones Industrials (^DJI 1.05%) down a modest 27 points by 11 a.m. EDT. The broader market is also slightly lower, the tech-heavy Nasdaq has suffered more severe losses of 0.4%.

Yet beyond economic data, Obamacare also played a big role in the Dow's lackluster performance. Health insurer UnitedHealth (UNH 0.73%) has dropped almost 4% after announcing in its quarterly report that a major customer had shifted from a full-risk insurance plan to a less expensive fee-based insurance service. With Obamacare giving employers an incentive to take on risk through self-insurance-based strategies rather than passing off risk onto the shoulders of UnitedHealth and its fellow insurers, these moves could accelerate as more of the health care legislation takes effect.

In more positive earnings news, Verizon (VZ 1.75%) has jumped more than 4% after beating earnings expectations. Record-high margins for its wireless service of more than 50% helped contribute to profit, and additions in customer counts for wireless offerings and its FiOS Internet and television services showed that the company continues to find multiple avenues for growth. The much-watched smartphone activation numbers came in at 7.2 million, with 4 million of those being iPhones.

Earnings have played a big role outside the Dow. Travelzoo (TZOO 0.99%) has soared almost 14% after posting better-than-expected revenue and income. Profit soared almost 50% from the year-ago quarter; the company cited strong performance in both North America and Europe. Having chosen to refocus on its core business after a foray into daily deals didn't produce the hoped-for results, Travelzoo looks forward to seeing its new hotel-booking start to produce more growth when it's released later this year.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$31,097.26 (1.05%) $321.83
UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
UNH
$517.40 (0.73%) $3.77
Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$51.64 (1.75%) $0.89
Travelzoo Inc. Stock Quote
Travelzoo Inc.
TZOO
$6.12 (0.99%) $0.06

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

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