Wall St mixed as US health insurers tumble on Medicare rate freeze

Stocks on Wall Street were mixed as the tech-heavy Nasdaq Composite remained buoyant ahead of earnings from Microsoft, Meta Platforms and Tesla, while the blue-chip Dow Jones Industrial Average was dragged lower by a slump in healthcare insurers as the Centers for Medicare and Medicaid Services proposed keeping payment rates relatively flat next year.

The kiwi climbed above 60 US cents against a broadly weaker greenback as gold remains the favoured haven for investors amid heightened geopolitical uncertainty and talk of yen intervention, while the Federal Reserve’s upcoming policy review is expected to keep the federal funds rate unchanged.

Across the Atlantic, the European Union and India completed a free trade deal after negotiations accelerated in the face of US President Donald Trump’s aggressive tariff policies.

And locally, Statistics New Zealand is due to release monthly jobs data while inflation figures across the Tasman will be key for the Reserve Bank of Australia on whether it hikes its target cash rate next week.

A mixed bag

Stocks on Wall Street were torn in different directions as tech stocks including Microsoft, Apple, Nvidia and Amazon were among the day’s gainers ahead of earnings from the Magnificent 7 megacap firms, which are collectively expected to lift fourth-quarter revenue 20%, according to Bloomberg Intelligence. That would be the slowest pace of growth since early 2023.

Microsoft, Meta and Tesla are due to report on Wednesday in the US, with Apple scheduled for Thursday.

The tech-heavy Nasdaq was up 0.9% in late trading, buoying the S&P 500, which was up 0.4%. The Dow sank 1% as healthcare insurers such as Humana, UnitedHealth Group and CVS tumbled on news the White House wants Medicare to keep payment rates to an average increase of less than 0.1% next year.

UnitedHealth tumbled 20% in late trading as the insurer also reported a subdued fourth quarter, in line with analysts’ reduced expectations.

Local cancer detection firm Pacific Edge has gained 11% on the NZX so far this month as it seeks to wrestle back coverage under the Medicare scheme.

Among other companies reporting in the Northern Hemisphere session, automaker General Motors rallied after beating forecasts and promised a US$6 billion share buyback, while shipping company UPS advanced on its better-than-expected result.

Coming in to land

Airlines were generally weaker after results from American Airlines and JetBlue noted the impact of the US federal government shutdown and the tough environment, while plane maker Boeing gained on surging sales as it works to clear the record backlog of orders.

Across the Atlantic, stock markets were mixed as the UK’s FTSE 100 rose 0.6% and France’s CAC 40 gained 0.3%, while Germany’s DAX 30 declined 0.2%.

The European Union clinched a free trade deal with India, deepening their ties in an environment where US President Donald Trump’s aggressive tariff policies have upended the global trade order. The kiwi hit a seven-month high, rising to 60.17 US cents from 59.68 cents yesterday ahead of the Federal Reserve’s policy review on Wednesday in the US, which is expected to keep the federal funds rate in a range of 3.5% and 3.75%.

Meanwhile, the US dollar was broadly weaker as traders continue to fret about the Trump administration’s policies and the impact on markets from potential intervention to support the yen. The kiwi hit a seven-month high, rising to 60.17 US cents from 59.68 cents yesterday.

Gold has continued to be the favoured asset class for investors to seek safety, with futures marginally weaker at US$5,081 an ounce at 7am in Auckland.

“The weaker US dollar backdrop has supported the move which has been underpinned by the elevated geopolitical risks,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The precious metal has gained 18% this year driven largely by the ‘debasement trade’ with investors less certain about the performance of sovereign debt markets in a risk off event.”

Australian futures are pointing to a 0.3% gain for the S&P/ASX 200 index when trading opens across the Tasman, after the resources-heavy benchmark was spurred on by the surging gold price yesterday.

Inflation figures across the Tasman are expected to show an accelerating rate of price increases, with bond traders pricing in a 60% chance the Reserve Bank of Australia will raise its target cash rate a quarter point to 3.85% next week.

Meanwhile, local data today include Stats NZ’s monthly filled jobs figures, which are expected to show a small gain.

Reporting by Paul McBeth. Image from National Cancer Institute on Unsplash.