Court Speaks, Markets Listen — Thursday’s IP Market Recap

by Marc Bastow | June 28, 2012 5:25 pm

[1]Thursday’s historic Supreme Court ruling[2] upholding the major tenets of President Barack Obama’s health care reform law ruled the day as investors tried to sort through the decision’s ramifications. Markets initially reacted negatively, as stocks sold off early on the announcement, but they managed to steady themselves just around noon and finished with fairly minimal losses.

Lost in the news of the day was a U.S. Bureau of Labor report that showed the number of Americans filing for first-time unemployment benefits fell last week, after matching the highest level of the year the week before.

The Nasdaq led the way down, dropping 0.9% to 2,849, while the Dow Jones Industrial Average — which at one point in the day saw every stock in the red — finished down 0.2% at 12,602; the S&P fell similarly to end at 1,329.

Investors are concerned that the so-called individual mandate[3] requiring all Americans to purchase health insurance will act like a tax, giving consumers another a reason to cut back on spending. In addition, concerns abound that businesses will be forced to spend more on health care and wind up spending less on big-ticket or luxury items.

The decision affected sectors in different ways[4].

Hospitals were the big winner on the day, with HCA Holdings (NYSE:HCA[5]) and Tenet Healthcare (NYSE:THC[6]) both up more than 10%. Community Health Systems (NYSE:CYH[7]) and Universal Health Services (NYSE:UHS[8]) both finished up over 8% on the day.

Health insurer WellPoint (NYSE:WLP[9]) sank 5% on the news[10], while Aetna (NYSE:AET[11]), Cigna (NYSE:CI[12]) and Coventry (NYSE:CVH[13]) all shed just more than 2%. Humana (NYSE:HUM[14]) and UnitedHealth (NYSE:UNH[15]) both managed to eke out small gains.

Also on Thursday, JPMorgan Chase (NYSE:JPM[16]) CEO Jamie Dimon admitted that initial estimates of losses on derivative trades[17] might be more than originally estimated. JPM struggled early in the session before staging a small rally to keep losses down to about 2%.

Discount retailers also were lower on the day after Family Dollar’s (NYSE:FDO[18]) earnings results[19] were not up to snuff, dropping the stock 2.8% on the day. Dollar Tree (NASDAQ:DLTR[20]) followed suit, down 2.4%, and Dollar General (NYSE:DG[21]) was down a fraction.

Three Up

• Arch Coal (NYSE:ACI[22]): Up 7.8% (47 cents) to $6.50.
• Cheniere Energy (AMEX:LNG[23]): Up 7.4% (95 cents) to $13.76.
• Saks (NYSE:SKS[24]): Up 6.8% (66 cents) to $10.38.

Three Down

• Arena Pharmaceutical (NASDAQ:ARNA[25]): Down 10.2% ($1.16) to $10.23.
• Michael Kors (NYSE:KORS[26]): Down 5.8% ($2.52) to $40.69.
• Lululemon (NASDAQ:LULU[27]): Down 5.6% ($3.44) to $58.41.

Marc Bastow is an Assistant Editor at InvestorPlace.com. As of this writing he did not hold a position in any of the aforementioned securities.

Source URL: https://investorplace.com/2012/06/the-court-speaks-markets-listen-thursdays-ip-market-recap-aet-wlp-cvh-hum-ci-unh/

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