Obama Beams, Health Stocks Cool Off

The hospital and Medicaid stocks that led Monday's health rally cool off after hitting year highs as President Obama signs the reform bill into law.

By Eric Rosenbaum , Mar 23, 2010 5:54 PM EDT

(Health care story updated for market close on Tuesday)

WASHINGTON D.C. (

TheStreet

) -- President Obama signed health care reform into law at a White House ceremony shortly before noon on Tuesday, but the photo op didn't help extend the recent rally in health care stocks.



President Obama

On Monday,

hospital operators and Medicaid-focused health care providers posted big gains, led by

Tenet Healthcare

(THC) - Get Report

Health Management Associates

(HMA)

Centene

(CNC) - Get Report

and

HMS Holdings

(HMSY) - Get Report

. Many health-care-related names set new 52-week highs.

During Tuesday's session -- even as Obama looked more relaxed than in recent weeks as he basked in his victory -- investors were taking some of the short-term froth off the sector's recent gains.

The Dow Jones U.S. Health Care Index was marginally positive (about 0.4%) on Tuesday.

Shares of

MedCath

( MDTH), which had rallied last week after an

analyst upgraded the hospital operator on news that it would sell off its hospital assets, suffered the largest decline Tuesday, falling 1.7% at the close on Tuesday, and after hours trading in MedCath shares was nearing a double digit decline on Tuesday.

Shares of Health Management, meanwhile finished slat on Tuesday, after big gains on Monday.

Community Health Systems

(CYH) - Get Report

finished down 1.9% on Tuesday, while

Lifepoint Hospitals

(LPNT)

was down marginally on Tuesday.

On Monday, Lifepoint, Community Health and

Universal Health Services

(UHS) - Get Report

all rose by about 6% and all touched 52-week highs intraday.

Among health care service providers, HMS Holdings saw its share prices slip 2.6% on Tuesday afternoon, while Centene, and