Stocks Pressured by Weakness in Netflix and Health Insurers
How did your country report this? Share your view in the comments.
Diverging Reports Breakdown
UnitedHealth was a reliable earnings performer – until its shocking Thursday results
UnitedHealth lost more than 22%, shaving nearly $120 billion off its market value, its biggest one-day selloff since 1998. UnitedHealth pulled in revenue of $109.6 billion for the first quarter, about $2 billion shy of expectations, and it also fell short of earnings estimates. The industry bellwether pointed to rising medical costs in its plans for older adults – and what it termed as “unanticipated changes” in its Optum health services subsidiary that was viewed as the growth engine of the conglomerate’s business. The company has faced stark challenges over the past year – a cyberattack at its tech unit that affected 200 million Americans and the murder of its insurance unit head, Brian Thompson, outside the company’s investor meeting in New York last month. The Justice Department was investigating its Medicare billing practices for using unneeded medical codes to increase payments, the Wall Street Journal reported.
Companies UnitedHealth’s earnings miss leads to biggest selloff since 1998
Analysts puzzled by company’s unexpected earnings shortfall
Optum unit’s weak performance surprises investors
UnitedHealth faces pressure from increased patient care needs
April 17 (Reuters) – UnitedHealth (UNH.N) , opens new tab has traditionally been a company investors saw as reliable, having not missed earnings estimates since the 2008 global financial crisis.
Until Thursday. The country’s largest insurer by market value fell far short of expectations with its quarterly earnings, leading to its worst one-day selloff in more than a quarter-century.
Sign up here.
Its subsequent conference call still left analysts puzzled over the shortfall, even though some praised it for walking analysts through the circumstances that caused the earnings miss.
UnitedHealth pulled in revenue of $109.6 billion for the first quarter, about $2 billion shy of expectations, and it also fell short of earnings estimates. The industry bellwether pointed to rising medical costs in its plans for older adults – and what it termed as “unanticipated changes” in its Optum health services subsidiary that was viewed as the growth engine of the conglomerate’s business.
Several analysts said they were left with a lot of burning questions as the insurer is typically known to be conservative in its forecast and often raises it as the year progresses.
“We do not believe the earnings call answered all investors’ questions which could indicate a lack of clarity on UNH’s part given it is still early in the year,” said Mizuho analyst Ann Hynes.
At first, investors interpreted the earnings miss as an industry-wide problem, aggressively dumping both UnitedHealth shares and those of its rivals. That approach changed by mid-morning, however, when rival Elevance Health (ELV.N) , opens new tab said it still expected quarterly profits to come in as forecast.
The company’s previous earnings miss was in Q1 2008
The corporate logo of the UnitedHealth Group appears on the side of one of their office buildings in Santa Ana, California, U.S., April 13, 2020. REUTERS/Mike Blake/File Photo Purchase Licensing Rights , opens new tab
Investors kept up the selling pressure on UnitedHealth, but the other shares recovered a good chunk of their losses; Elevance, which at one point had been down 5.8%, ended off by just 2.3%.
UnitedHealth lost more than 22%, shaving nearly $120 billion off its market value, its biggest one-day selloff since 1998.
The company has faced stark challenges over the past year – a cyberattack at its tech unit that affected 200 million Americans and the murder of its insurance unit head, Brian Thompson. His killing outside the company’s investor meeting in New York rattled the industry as it triggered an outpouring of anger from Americans frustrated over their dealings with health insurers.
In February, the Wall Street Journal reported that the Justice Department was investigating its Medicare billing practices for using unneeded medical codes to increase payments. The health insurer has said it is unaware of a probe.
Investors also expressed surprise at the performance of its Optum unit, which includes its pharmacy benefits management division and the prescription drug plans it runs for Medicare. Those plans were affected by changes in 2025 reimbursements.
“Optum was kind of always the saving grace, being able to grow through (the challenges),” said Kevin Gade, chief operating officer of investment firm Bahl & Gaynor.
“Last year, Optum was always the silver lining that UnitedHealth had versus its peers,” he said.
Wall Street will be keenly watching details from rivals, especially Humana (HUM.N) , opens new tab , another top provider of Medicare Advantage plans whose shares fell 7% on Thursday.
“It’s the shock of how quickly we saw negative trends develop and then probably added complexity from just the challenging backdrop that the industry has seen for the last year or two,” said Leerink Partners analyst Whit Mayo.
Reporting by Sriparna Roy and Bhanvi Satija in Bengaluru; editing by Caroline Humer and David Gaffen
Our Standards: The Thomson Reuters Trust Principles. , opens new tab
Share X
Link Purchase Licensing Rights
Stocks Pressured by Weakness in Netflix and Health Insurers
US June housing starts rose +4.6% m/m to 1.321 million, stronger than expectations of 1.300 million. June building permits, a proxy for future construction, unexpectedly rose +0.2%. The 10-year T-note yield is down -3 bp to 4.42%. The S&P 500 Index ($SPX) (SPY) today down -0.08%, the Dow Jones Industrials Index ($DOWI) (DIA) is down 0.44%, and the Nasdaq 100 Index ($IUXX) (QQQ) isDown 0.15%. September E-mini S-P futures (ESU25) are down – 0.14%, and September E.-mini Nasdaq futures (NQU25) were down -1.17%. The Euro Stoxx 50 is down 1%. The Nikkei Stock Average closed down 2%. The Shanghai Composite closed up +0%. China’s Shanghai composite index closed up 2%.
The University of Michigan’s July US consumer sentiment index rose +1.1 to a 5-month high of 61.8, stronger than expectations of 61.5.
US June housing starts rose +4.6% m/m to 1.321 million, stronger than expectations of 1.300 million. Also, June building permits, a proxy for future construction, unexpectedly rose +0.2% m/m to 1.397 million versus expectations of a -0.5% m/m decline to 1.387 million.
Falling bond yields are supportive of stocks following dovish comments from Fed Governor Christopher Waller on Thursday evening, who stated that he supports a Fed interest rate cut at the July 29-30 FOMC meeting. Also, an easing of inflation expectations in today’s University of Michigan’s July inflation expectations report was bullish for T-notes and stocks. The 10-year T-note yield is down -3 bp to 4.42%.
Stock indexes initially moved higher, with the S&P 500 and Nasdaq 100 posting new record highs. Bullish factors included the stronger-than-expected housing starts report and generally upbeat earnings reports. Also, the University of Michigan’s US July consumer sentiment index rose more than expected to a 5-month high.
Stocks today gave up an early advance and turned lower as a -5% decline in Netflix weighed on technology stocks after the company forecasted below-consensus full-year operating margins. Also, the weakness in health insurance providers is weighing on the broader market today after Humana lost a lawsuit to reverse cuts to its Medicare bonus payments and after Elevance Health was downgraded.
The S&P 500 Index ($SPX) (SPY) today down -0.08%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.44%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.15%. September E-mini S&P futures (ESU25) are down -0.14%, and September E-mini Nasdaq futures (NQU25) are down -0.17%.
Story Continues
Thursday evening, Fed Governor Christopher Waller said, “With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate. I believe it makes sense to cut the FOMC’s policy rate by 25 basis points two weeks from now.”
Recent trade news has put some downward pressure on stocks. President Trump said late Wednesday that he intends to send a tariff letter to more than 150 countries notifying them their tariff rates could be 10% or 15%, effective August 1, and that the group was “not big countries who don’t do that much business with the US.”
Also, President Trump last weekend announced that the US will impose 30% tariffs on US imports from the European Union and Mexico, effective August 1. Mr. Trump said last Thursday that a 35% tariff on some Canadian products would take effect on August 1, up from the current 25%. Last week, Mr. Trump imposed a 50% tariff on copper imports, which will include semi-finished goods, and stated that drug companies could face tariffs as high as 200% on imports if they don’t relocate production to the US within the next year.
Federal funds futures prices are discounting the chances for a -25 bp rate cut at 5% at the July 29-30 FOMC meeting and 58% at the following meeting on September 16-17.
Earnings season began in earnest this week as big bank earnings results came in stronger than expected. Early results now show S&P 500 earnings are on track to rise +3.2% for the second quarter, better than the pre-season expectations of +2.8% y/y, according to Bloomberg Intelligence. Also, only six of the eleven S&P 500 sectors are projected to post an increase in earnings, the fewest since Q1 of 2023, according to Yardeni Research.
Overseas stock markets today are mixed. The Euro Stoxx 50 is down -0.42%. China’s Shanghai Composite closed up +0.50%. Japan’s Nikkei Stock 225 fell from a 2.5-week high and closed down -0.21%.
Interest Rates
September 10-year T-notes (ZNU25) today are up +9 ticks. The 10-year T-note yield is down -2.0 bp to 4.432%. T-notes are climbing today on dovish comments from Fed Governor Christopher Waller, who said he backs a Fed rate cut at the July 29-30 FOMC meeting. Also, falling inflation expectations in today’s University of Michigan report were bullish for T-notes.
On the bearish side, today’s US housing starts report was stronger than expected. Also, today’s increase in the University of Michigan US July consumer sentiment to a 5-month high was negative for T-notes.
European government bond yields today are moving higher. The 10-year German bund yield is up +2.1 bp to 2.696%. The 10-year UK gilt yield climbed to a 1.5-month high of 4.680% and is up +2.1 bp to 4.676%.
Eurozone May construction output fell -1.7% m/m, the biggest decline in nearly 2.5-years.
The German June PPI fell -1.3% y/y, right on expectations and the steepest pace of decline in 9 months.
Swaps are discounting the chances at 1% for a -25 bp rate cut by the ECB at the July 24 policy meeting.
US Stock Movers
Weakness in managed health care stocks is weighing on the broader market today. Elevance Health (ELV) is down more than -5% to lead losers in the S&P 500 after Leerink Partners downgraded the stock to market perform from outperform. Also, Humana (HUM) is down more than -2% after it lost a lawsuit seeking to reverse cuts to its Medicare bonus payments. In addition, Molina Healthcare (MOH) is down more than -4%, and Centene (CNC) and CVS Health Corp (CVS) are down more than -1%.
Netflix (NFLX) is down more than -5% to lead losers in the Nasdaq 100 after forecasting a full-year operating margin of 29.5%, below the consensus of 29.7%.
American Express (AXP) is down more than -3% to lead losers in the Dow Jones Industrials after reporting Q2 total expenses of $12.90 billion, above the consensus of $12.73 billion.
3M Co (MMM) is down more than -3% after cutting its full-year organic sales estimate to +2% from a previous forecast of +2% to +3%.
Sarepta Therapeutics (SRPT) is down more than -18% after it said another patient died from acute liver failure after receiving one of its experimental gene therapies for a muscle disease.
Autoliv (ALV) is down more than -4% after reporting Q2 adjusted operating margin of 9.30%, below the consensus of 9.35%.
Builders FirstSource (BLDR) is down more than -2% after Zelman & Associates downgraded the stock to underperform.
Talen Energy (TLN) is up more than +22% after acquiring gas-fired power plants in Pennsylvania and Ohio for $3.5 billion.
Invesco Ltd (IVZ) is up more than +11% to lead gainers in the S&P 500 after it filed a proxy statement with the SEC seeking to convert the Invesco QQQ Trust Series 1 into an open-ended fund from a unit investment trust.
Interactive Brokers Group (IBKR) is up more than +6% after reporting Q2 total net interest income of $860 million, well above the consensus of $794.7 million.
Regions Financial (RF) is up more than +4% after reporting Q2 net interest income of $1.27 billion, better than the consensus of $1.24 billion, and raising its full-year net interest income growth estimate to +3% to +5% from a previous estimate of +1% to +4%.
Abbott Laboratories (ABT) is up more than +3% after Jefferies upgraded the stock to buy from hold with a price target of $145.
Norfolk Southern (NSC) is up more than +3% on reports that Union Pacific is said to be exploring an acquisition of the company.
Charles Schwab (SCHW) is up more than +2% after reporting Q2 net revenue of $5.85 billion, stronger than the consensus of $5.72 billion.
Earnings Reports (7/18/2025)
3M Co (MMM), Ally Financial Inc (ALLY), American Express Co (AXP), Charles Schwab Corp/The (SCHW), Comerica Inc (CMA), Euronet Worldwide Inc (EEFT), Huntington Bancshares Inc/OH (HBAN), MarketAxess Holdings Inc (MKTX), Regions Financial Corp (RF), Schlumberger NV (SLB), Southern Copper Corp (SCCO), Truist Financial Corp (TFC).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
Stock market today: Dow slides as UnitedHealth plunges, Nasdaq, S&P 500 sputter to end down week
All three of the major averages closed the week lower, with the Nasdaq and Dow falling over 2.5%. The S&P 500 was down around 1.5% for the week. Trump’s on-again, off-again feud with the Fed chair he appointed came back into the spotlight, as the president said his “termination cannot come fast enough”
The Dow Jones Industrial Average (^DJI) fell 1.3%, or more than 500 points. The benchmark S&P 500 (^GSPC) rose 0.1%, and the tech-heavy Nasdaq Composite (^IXIC) slipped 0.1% after Wednesday’s tech-led sell-off.
Shares of UnitedHealth (UNH) tanked over 22%, dragging the Dow lower, after the health insurer cut its full-year profit forecast. UnitedHealth is the largest Dow component by weight.
Thursday marked the end of trading for the week with US markets closed for Good Friday. All three of the major averages closed the week lower, with the Nasdaq and Dow falling over 2.5%. The S&P 500 was down around 1.5% for the week.
Trump’s on-again, off-again feud with the Fed chair he appointed came back into the spotlight, as the president said Thursday that his “termination cannot come fast enough” and mused about replacing him.
Trump’s comments came after Powell, speaking in Chicago, issued his starkest warning yet on how tariffs could affect the US economy. The Fed chair said the central bank would likely face a “challenging scenario,” considering he expects the levies to exacerbate inflation and slow economic growth.
Read more: The latest on Trump’s tariffs
Powell also threw cold water on hopes the central bank would imminently slash interest rates as tariffs roll in, saying Fed officials will “wait for greater clarity” on Trump’s trade policy.
LIVE COVERAGE IS OVER
24 updates