UnitedHealth and other insurer stocks were a bright spot in the market Monday. Source: UnitedHealth.
2015 has been a whipsawing experience for investors once again, as January's substantial losses have given way to new record highs for the market in February. Monday morning's activity showed how the speed of the market's ascent has unnerved some investors, as the Dow Jones Industrials (^DJI +1.79%) gave back about 50 points as of 10:45 a.m. EST. Global stock markets were generally higher as market participants applauded a debt deal in Greece, but that may also have reduced some of the safe-haven buying that the U.S. stock market has enjoyed lately as European investors had looked for places to reduce their exposure to stocks on the continent. Within the Dow, various factors pulled the market in opposite directions, as Boeing (BA +2.06%) fell sharply even as UnitedHealth Group (UNH +2.44%) posted solid gains.
Aerospace giant Boeing fell almost 3% after the company got a downgrade from Goldman Sachs this morning. The Wall Street firm argued that the entire aerospace industry has seen impressive outperformance even in an upward-moving market for several years, and that valuations have now gotten high enough that some of the future risks are beginning to balance further upside potential. In particular, after years of having gotten large numbers of orders at a rate much faster than it could deliver, both Boeing and rival Airbus have ramped up their production capacity. Moreover, with airlines having enjoyed their best financial performance in decades, Goldman is skeptical that Boeing will be able to sustain the most recent flood of aircraft orders, and that could put an end to Boeing's bull-market run. Even with the drop, though, Boeing shares have soared by 15% in just the past month as shareholders have applauded the company's long-term performance.
Source: Boeing.
Meanwhile, UnitedHealth did its best to offset the Dow's losses, climbing more than 2%. Late Friday afternoon, the Centers for Medicare and Medicaid Services said that payment rates to insurers that offer private Medicare Advantage plans would fall by 0.95% in 2016. However, Medicare believes insurers will likely see a revenue increase of just over 1%, as a shift in services will more than offset lower rates. Many of those following the industry had expected flat or increased rates, making the news seem bad for UnitedHealth and its peers. Yet the government agency also proposed some changes that would make it easier for insurers to qualify for better quality ratings, which could enhance payouts and produce greater profits. Overall, UnitedHealth has done a good job of navigating the quickly changing healthcare environment, and its stock outperformed even the gains in other insurance companies Monday morning.
So long as stocks keep hitting new record highs, some investors will remain nervous about how long the bull market can last. Despite the uncertainty, though, individual stocks will keep pushing the market in both directions, making it clear that finding the best stocks is the key to maximizing your success.
