Wall Street Jumps as Private Health Insurance is Spared by Federal Government

Michael Teague  |

After the government announced that it would actually increase payments to private Medicare Advantage insurers by 3.3 percent, rather than reducing them as it had originally planned, the industry’s stocks surged. Humana Inc. (HUM) gained 5.47 percent to close at $79.12, while UnitedHealth Group (UNH) was up 4.70 percent to close at $61.74, and Cigna Corp. (CI) bumped 2.92 percent to settle at $64.75.

The Dow toppled its intraday high, hitting 14,684.49, before settling at 14,661.32, up 0.61 percent. The S&P, for its part, closed up 0.51 percent at 1,570.17, while the Nasdaq gained 0.48 percent to close at 3,254.86.

March auto sales figures, which were released throughout the day, were relatively strong, indicating about 1.5 million vehicles sold for the month, prompting Edmunds.com to raise its sales forecast for the full year of 2013 to 15.5 million, the highest since 2007. The trend seems to be led for the moment by Chrysler and Ford (F), both of whom beat analyst expectations and put up their best single sales months since that year as well.

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General Motors (GM), for its part, also had its biggest single-month sales gain since 2007, but came up just short of analyst expectations. Still, the company closed up 0.49 percent to $27.49, while Ford gained 0.85 percent to $13.01. The sales report is at least as significant in that it bolsters what the encouraging indicators from the housing market have already been suggesting about the economy and consumer confidence.

Fannie Mae (FNMA) reported that it actually earned $17.2 billion in 2012, while asking for no federal aid for the first time since it was taken over by the government in the wake of the financial crisis in 2008. This is a contrast to 2011, when the mortgage company lost almost $17 billion and necessitated almost $26 billion in federal aid.

The company’s success is directly related to the reduction in home foreclosures and delinquent loans, and the rise in home prices, sales, and building permit requests, and as such is seen as representative of the rebounding housing market.

Meanwhile, the government of Cyprus just finalized its 10 billion Euro loan deal with the Eurogroup, the powerful collection of Eurozone finance ministers, that will allow the funds to start pouring in to the island nation’s troubled banks as soon as May.

Aside from being yanked upward by Health Care, the S&P got some help from apparel retailers Urban Outfitters (URBN), up 3.80 percent to close at $39.87 on strong reported revenue, as well as Limited Brands Inc. (LTD) up 2.98 percent to close at $46.

Notable performances on the Dow included Home Depot Inc. (HD), up 1.94 percent to $71.02 after the company sold $2 billion of bonds to fund a $17 billion share buyback. McDonald’s (MCD) was up 1.22 percent to $100.26, while Cisco (CSCO) bounced back 1.87 percent to close at $21.22.

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