Health Care Stocks in the S&P 500 Experience Declines on the Market

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Health Care Stocks in the S&P 500 Experience Declines on the Market

Key Takeaways

  • The S&P 500 dropped 0.7% on Tuesday, April 2, 2024, amid increasing concerns about the timing of potential interest rate cuts.
  • Health care stocks tumbled after the federal government said Medicare Advantage payment rates would not rise as much as the industry had hoped.
  • Supply concerns boosted crude oil prices, underpinning gains for shares of companies in the oil and gas sector.

Major U.S. equities indexes tumbled as concerns mounted about the likelihood of the Federal Reserve lowering interest rates in the near future.

Signals of persistent economic strength have clouded the picture as Fed officials consider the optimal timing for adopting a looser policy stance.

The S&P 500 dropped 0.7%, moving lower for the second straight day as stocks struggle to find their footing in the opening days of the second quarter. The Dow and the Nasdaq fell approximately 1.0%.

Health care stocks slipped after the after the Centers for Medicare & Medicaid Services (CMS) said Medicare Advantage plans will receive an annual price increase of 3.7% from 2024 to 2024—in line with an initial proposal released in January. The payment revision disappointed major health insurers, who had lobbied for a more significant increase, with the more subdued rise pressuring their margins as medical costs push higher.

Shares of health insurance giant Humana (HUM) saw the heaviest declines on the S&P 500, plunging 13.4% following the announcement from the CMS. The losses also affected other companies in the health care sector, with shares of pharmacy giant CVS Health (CVS) falling 7.2% and shares of fellow insurers Centene (CNC) UnitedHealth Group (UNH) down 6.8% and 6.4%, respectively.

Norwegian Cruise Line (NCLH) shares fell 8.0% amid reports one of the operator’s ships left eight passengers stranded on the African island of São Tomé and Príncipe after they arrived late following a private excursion. A company spokesperson said travelers are responsible for returning to the ship by the published all aboard time.

Shares of VF Corp. (VFC), owner of The North Face, Vans, and other clothing brands, lost 6.7% after fellow apparel company PVH (PVH) said it could see a negative impact from challenging macroeconomic conditions in Europe. PVH shares plummeted 22.2%.

Crude oil futures moved higher as Middle East tensions, drone attacks against Russian refineries, and the likely extension of OPEC+ production cuts raised supply concerns. The higher prices helped boost oil and gas stocks.

Phillips 66 (PSX) shares posted Tuesday’s top performance among S&P 500 stocks, jumping 3.8%. Marathon Petroleum (MPC) and Valero Energy (VLO) shares gained 3.4% and 2.7%, respectively.

Oil was not the only commodity to see a jump in prices—copper prices also moved higher amid an improving outlook for the Chinese economy. The uptick helped boost shares of major copper producer Freeport McMoran (FCX), which added 2.2%.

Shares of McCormick & Company (MCK) also gained 2.2% after Argus upgraded the stock to “buy.” Analysts highlighted the spice company’s potential to boost sales volumes, which have been slumping in some areas.

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