How Obamacare Has Dinged the Dow This Morning


Negative sentiment on Wall Street has been building throughout the week, and this morning brought unwelcome news that the much-followed Leading Economic Index pointed to a potential drop in economic growth for the first time since last August. A rise in weekly claims for unemployment benefits also added to the economic gloom, helping to send the Dow Jones Industrials down a modest 27 points by 11 a.m. EDT. The broader market is also slightly lower, the tech-heavy Nasdaq has suffered more severe losses of 0.4%.

Yet beyond economic data, Obamacare also played a big role in the Dow's lackluster performance. Health insurer UnitedHealth has dropped almost 4% after announcing in its quarterly report that a major customer had shifted from a full-risk insurance plan to a less expensive fee-based insurance service. With Obamacare giving employers an incentive to take on risk through self-insurance-based strategies rather than passing off risk onto the shoulders of UnitedHealth and its fellow insurers, these moves could accelerate as more of the health care legislation takes effect.

In more positive earnings news, Verizon has jumped more than 4% after beating earnings expectations. Record-high margins for its wireless service of more than 50% helped contribute to profit, and additions in customer counts for wireless offerings and its FiOS Internet and television services showed that the company continues to find multiple avenues for growth. The much-watched smartphone activation numbers came in at 7.2 million, with 4 million of those being iPhones.

Earnings have played a big role outside the Dow. Travelzoo has soared almost 14% after posting better-than-expected revenue and income. Profit soared almost 50% from the year-ago quarter; the company cited strong performance in both North America and Europe. Having chosen to refocus on its core business after a foray into daily deals didn't produce the hoped-for results, Travelzoo looks forward to seeing its new hotel-booking start to produce more growth when it's released later this year.

When President Obama was re-elected, shares of UnitedHealth and other health insurers fell immediately. Is Obamacare a death knell for health insurers, or is the market missing out on some of the opportunities the law presents? In this brand-new premium report on UnitedHealth, The Motley Fool takes a long-term view, honing in on prospects for UnitedHealth in a post-Obamacare world. So don't miss out -- simply click here now to claim your copy today.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends UnitedHealth Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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