admin While the majority of U.S. stocks gained on Thursday, a dramatic plunge in UnitedHealth Group’s shares—its steepest single-day drop in over 25 years—held Wall Street back.
The S&P 500 rose marginally by 0.1%, despite roughly three-quarters of the index’s stocks posting gains. The Nasdaq Composite dipped 0.1%, showing a steadier performance following a sharp sell-off the day prior. However, the Dow Jones Industrial Average fell by 527 points, or 1.3%, largely due to the significant slump in just one stock—UnitedHealth Group—which shed 22.4% of its value after reporting disappointing quarterly earnings.
One of the key gainers on the day was pharmaceutical giant Eli Lilly, which surged by 14.3% after announcing positive results for a once-daily pill aimed at treating obesity and diabetes.
Energy shares also experienced a rally as oil prices rebounded from sharp losses earlier in the month. Diamondback Energy rose 5.7%, while Halliburton added 5.1%.
Meanwhile, the S&P/TSX Composite Index in Canada closed up by 86.02 points, finishing at 24,192.81.
Technology shares were more stable following an update from global chipmaker Taiwan Semiconductor Manufacturing Co. (TSMC), which posted quarterly profits in line with analysts’ forecasts. More significantly, TSMC reported no noticeable slowdown in customer demand due to President Donald Trump’s ongoing trade war—contrary to the concerns expressed by other companies. Still, the company exercised caution. “While we have not seen any changes in our customers’ behaviour so far, uncertainties and risks from the potential impact of tariff policies exist,” said Chief Financial Officer Wendell Huang. TSMC’s U.S.-listed shares rose by 0.1%.
What Went Wrong at UnitedHealth?
Despite gains elsewhere, UnitedHealth’s staggering decline—its worst since 1998—came after it dramatically reduced its financial forecast for the year. The company cited unexpectedly high levels of care being accessed by its Medicare Advantage customers, including more doctor visits and outpatient services than anticipated.
This marked UnitedHealth’s first earnings miss since 2008 and came alongside a grim outlook, leading investors to pull back. Many had hoped the U.S. insurance giant would stick to its profit targets, especially under the assumption that medical demand would remain consistent with 2024 levels. Historically, UnitedHealth has tended to issue conservative forecasts, according to at least two investors.
“No one was anticipating this level of a miss or such a sharp cut to guidance,” said Kevin Gade, Chief Operating Officer at Bahl & Gaynor, which holds UnitedHealth shares.
Since mid-2023, U.S. health insurers have been battling rising costs, fuelled by growing demand for services under government-sponsored Medicare plans for elderly or disabled citizens.
Though UnitedHealth’s announcement initially pulled other insurers down, some regained ground after competitor Elevance Health confirmed it was maintaining its current quarterly outlook. UnitedHealth, however, continued to fall.
In other market news, Nvidia also weighed heavily on the indices. The high-profile chipmaker dropped for the second consecutive day after revealing that fresh export restrictions to China could dent its first-quarter revenues by as much as $5.5 billion. Nvidia’s stock fell 2.9%, making it the second-largest drag on the S&P 500.
At the close, the S&P 500 rose by 7.00 points to 5,282.70. The Dow Jones Industrial Average fell by 527.16 points to 39,142.23, while the Nasdaq Composite slipped by 20.71 points to 16,286.45.
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