S&P, Nasdaq rise as corporate earnings roll in; Medicare rates hit insurers
The S&P 500 and the Nasdaq opened higher on Tuesday as investors parsed a fresh round of mega-cap earnings, while health insurers declined as the Trump administration's Medicare Advantage payment proposal disappointed investors.
By Reuters | Updated:
Reuters
The S&P 500 and Nasdaq advanced on Wednesday as investors parsed through a slate of bellwether earnings, while health insurers dropped after a Medicare Advantage payment proposal from the Trump administration disappointed investors.
The S&P 500 inched closer to record levels and hovers about 35 points shy of the 7,000 milestone - a mark that analysts have pegged as a potential pocket of technical resistance.
The Dow fell, pressured by a 19% drop in UnitedHealth after the Trump administration floated only a modest increase in Medicare insurer payment rates.
The proposal clouded over the insurer's forecast for 2026 adjusted profit, which was above analysts' expectations. Peers Humana and CVS fell 19% and 9.2%, respectively.
The S&P 500 health index dropped the most, down 1%.
Earnings took center stage. Boeing swung to a fourth-quarter profit, but its shares were down 1.8%, while General Motors advanced 5.4% after reporting higher fourth-quarter core profit.
United Parcel Service projected higher revenue for 2026, and rose 1.6%. Peer FedEx added 1%.
In airlines, American Airlines fell 3.3% despite issuing a 2026 profit forecast that topped estimates. JetBlue fell 6.5% on a wider-than-expected quarterly loss.
Airlines are contending with mass cancellations triggered by severe winter weather across the U.S. East Coast.
At 09:36 a.m. ET, the Dow Jones Industrial Average fell 0.68%, to 49,076.67, the S&P 500 rose 0.20%, to 6,964.37, and the Nasdaq Composite rose 0.52%, to 23,723.11.
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In total, 102 S&P 500 companies are set to post earnings results this week. Of the 64 that had reported as of Friday, 79.7% have topped analyst expectations, as per data compiled by LSEG.
"Our view this year is the impetus for markets to continue to rise is going to be an earnings story rather than a multiples story," said Charlie Ripley, senior investment strategist at Allianz investment management.
"There's an expectation that those earnings will be fairly robust and you're seeing that reflected in stocks moving higher."
Meta, Microsoft, and Tesla report earnings on Wednesday, kicking off results from the so-called "Magnificent Seven", which will test the AI trade that has underpinned Wall Street's rally for much of the past year.
Signs of crowding in the AI trade have recently spurred a rotation into small-caps and other undervalued parts of the market.
The Russel 2000 index, has risen over 7% while the S&P 600 small-cap index has advanced 6.5% this month, compared with the benchmark S&P 500's 1.5% gain.
FED WATCH
The Federal Reserve begins its two-day policy meeting on Tuesday, with investors broadly expecting the central bank to leave interest rates unchanged.
Attention will be on policymakers' guidance, with traders alert to any signals around the Fed's leadership outlook. Questions over the Fed's independence resurfaced earlier this month after the Justice Department opened an inquiry involving Powell.
Consumer confidence figures for January are due at 10 a.m. ET, and expected to rise to 90.9 points from 89.1 in December.
The risk of a partial U.S. government shutdown also loomed ahead of the January 30 funding deadline, as a second fatal shooting by federal agents in Minneapolis sharpened scrutiny of Trump's immigration crackdown.
Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.
The S&P 500 posted 9 new 52-week highs and 4 new lows while the Nasdaq Composite recorded 40 new highs and 40 new lows.
The S&P 500 inched closer to record levels and hovers about 35 points shy of the 7,000 milestone - a mark that analysts have pegged as a potential pocket of technical resistance.
The Dow fell, pressured by a 19% drop in UnitedHealth after the Trump administration floated only a modest increase in Medicare insurer payment rates.
The proposal clouded over the insurer's forecast for 2026 adjusted profit, which was above analysts' expectations. Peers Humana and CVS fell 19% and 9.2%, respectively.
The S&P 500 health index dropped the most, down 1%.
Earnings took center stage. Boeing swung to a fourth-quarter profit, but its shares were down 1.8%, while General Motors advanced 5.4% after reporting higher fourth-quarter core profit.
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United Parcel Service projected higher revenue for 2026, and rose 1.6%. Peer FedEx added 1%.
In airlines, American Airlines fell 3.3% despite issuing a 2026 profit forecast that topped estimates. JetBlue fell 6.5% on a wider-than-expected quarterly loss.
Airlines are contending with mass cancellations triggered by severe winter weather across the U.S. East Coast.
At 09:36 a.m. ET, the Dow Jones Industrial Average fell 0.68%, to 49,076.67, the S&P 500 rose 0.20%, to 6,964.37, and the Nasdaq Composite rose 0.52%, to 23,723.11.
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MAG 7 EARNINGS LOOM
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In total, 102 S&P 500 companies are set to post earnings results this week. Of the 64 that had reported as of Friday, 79.7% have topped analyst expectations, as per data compiled by LSEG.
"Our view this year is the impetus for markets to continue to rise is going to be an earnings story rather than a multiples story," said Charlie Ripley, senior investment strategist at Allianz investment management.
"There's an expectation that those earnings will be fairly robust and you're seeing that reflected in stocks moving higher."
Meta, Microsoft, and Tesla report earnings on Wednesday, kicking off results from the so-called "Magnificent Seven", which will test the AI trade that has underpinned Wall Street's rally for much of the past year.
Signs of crowding in the AI trade have recently spurred a rotation into small-caps and other undervalued parts of the market.
The Russel 2000 index, has risen over 7% while the S&P 600 small-cap index has advanced 6.5% this month, compared with the benchmark S&P 500's 1.5% gain.
FED WATCH
The Federal Reserve begins its two-day policy meeting on Tuesday, with investors broadly expecting the central bank to leave interest rates unchanged.
Attention will be on policymakers' guidance, with traders alert to any signals around the Fed's leadership outlook. Questions over the Fed's independence resurfaced earlier this month after the Justice Department opened an inquiry involving Powell.
Consumer confidence figures for January are due at 10 a.m. ET, and expected to rise to 90.9 points from 89.1 in December.
The risk of a partial U.S. government shutdown also loomed ahead of the January 30 funding deadline, as a second fatal shooting by federal agents in Minneapolis sharpened scrutiny of Trump's immigration crackdown.
Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.
The S&P 500 posted 9 new 52-week highs and 4 new lows while the Nasdaq Composite recorded 40 new highs and 40 new lows.
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