The Joplin Globe, Joplin, MO

Business

April 2, 2013

Health insurers lead stocks higher on Wall Street

NEOSHO, Mo. — The Dow Jones industrial average touched another record high Tuesday after reports on auto sales and factory orders provided the latest evidence that the U.S. economy is strengthening. Traders plowed money back into European stocks as the financial situation in Cyprus appeared to stabilize.

The Dow rose as much as 112 points late Tuesday morning. The Standard & Poor’s 500 index approached its own record high.

Health insurance companies powered the gains, a day after the government released revised reimbursement rates for Medicare Advantage plans. The new numbers suggest that funding cuts will be less severe than analysts and companies had feared.

The Dow was up 70 points, or 0.5 percent, at 14,643 as of 2:57 p.m. Eastern time. It had risen as high as 14,684 in the late morning.

The Dow broke through an all-time record a month ago, on March 5. It has risen steadily since then, routinely setting new trading highs.

The Standard & Poor’s 500 index rose seven points, or 0.5 percent, to 1,569. It rose earlier to within a two points of its record trading high of 1,576, reached in October 2007.

The Nasdaq composite rose 14, or 0.4 percent, to 3,252.

European markets closed sharply higher on the first trading day after a tense, four-day holiday weekend. Paris’ CAC-40 rose 2 percent, London’s FTSE 100 1.2 percent and Frankfurt’s DAX 1.9 percent.

The gains in Europe markets boosted confidence among U.S. investors. While European markets were closed for four days for the Easter holiday, many traders feared that Cyprus’ precarious financial situation would worsen. That concern also weighed on U.S. markets Monday, said Peter Tchir, who runs the hedge fund TF Market Advisors.

But no bad news materialized. Instead, Cyprus’ international lenders agreed to extend until 2018 its deadline for meeting key budget targets. European markets opened higher and rose strongly after U.S. trading began Tuesday. The gains fed a virtuous cycle that sent stocks higher on both sides of the Atlantic, Tchir said.

“Everyone was waiting to see if Europe had problems from Cyprus,” he said. “Instead, we got the all-clear signal.”

The trading day began with solid March sales reports from U.S. automakers. Chrysler said it sold more cars and trucks than in any month since the Great Recession began, an increase of 5 percent. Sales for General Motors and Ford rose 6 percent.

Orders to U.S. factories rose 3 percent in February, the best gain in five months, the government said after trading began. The increase was driven by a surge in demand for commercial aircraft, an especially volatile category.

Health insurance companies rose the most of the 10 sectors in the S&P 500 index, more than 1 percent. The sector is up 17 percent this year.

Traders were relieved about the companies’ prospects after Monday’s news about Medicare Advantage rates. Preliminary data released in February had raised fears that companies offering the plans would be forced to cut benefits, increase customers’ premiums or abandon some markets. This week’s data suggest that may not be necessary.

UnitedHealth was the biggest gainer in the Dow. Humana Inc. led the S&P 500 higher. Also among the S&P 500’s top 15 gainers were DaVita HealthCare Partners Inc., Cigna Corp., WellPoint Inc. and Aetna Inc.

Among health insurance companies, UnitedHealth rose $3.41, or 6 percent, to $62.38. Humana gained $5.48, or 7 percent, to $80.50. DaVita HealthCare Partners rose $7.14, or 6 percent, to $127.05. Cigna added $2.53, or 4 percent, to $65.44. WellPoint increased $1.98, or 3 percent, to $69.42. Aetna rose $2.18, or 4 percent, to $54.56.

Some other companies making big moves:

— Hewlett-Packard plunged after a Goldman Sachs analyst downgraded the stock, predicting the company’s earnings will be weak. Shares fell $1.42, or 6 percent, to $21.89.

— Urban Outfitters climbed a day after the clothing and accessories company said sales at stores open at least a year have grown in the high single digits in the first two months of the fiscal quarter started Feb. 1. Sales at stores open at least a year is a key gauge of a retailer’s health because it excludes results from stores recently opened or closed. The stock rose $1.48, or 4 percent, to $39.89.

— Actavis Inc. rose after a U.S. court declared a rival’s patent invalid, clearing the way for Actavis to sell a generic asthma inhaler. The stock added $4, or 4 percent, to $96.46.

 

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