Healthcare Stocks Driving U.S. Market After Biden’s Super Tuesday Successes

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The U.S. stock market rally Wednesday is very much driven by huge gains in large healthcare insurers, as Joe Biden had an impressive showing on Super Tuesday.

The S&P 500 rose as much as 1.76%, with all three major U.S, indexes up considerably as well. importantly, the rally still wasn’t completely risk on, as the 10-year treasury yield continued falling, remaining a touch below 1%, although still with a positive spread over the 3 month’s yield of 0.81%. The Federal Reserve cut short-term interest rates by 50 basis points Tuesday.

Nonetheless, investors on Wednesday grew increasingly confident the market-unfriendly Bernie Sanders doesn’t have a sure shot at winning the primaries. Joe Biden won, among several key states, North Carolina and Virginia.

RealMoney's Bruce Kamich says healthcare innovator Livongo is worth monitoring. 

For the market as a whole, Sanders poses a threat because his wish for increased government spending likely means drastically higher corporate taxes, should his policies mostly pass though congress.

For healthcare stocks, which have been pressured in the past year or so due to election concerns, a Biden victory likely means far less regulation on the industry. Healthcare insurers have also been pressured by fears of payouts caused by the coronavirus, although a lot would have to go wrong for that outcome to come to fruition.

All headwinds considered, United Health, for example, fell 10.8% from the start of the year to February 28, outpacing the S&P 500’s loss for that time span of 9%. 

And while it may be easy to assume last week’s market correction was entirely about coronavirus fears, Valley Forge Capital Management Managing Director Dev Kantesaria to TheStreet recently, “they're [investors] certainly factoring in maybe 10% into the current downdraft [last week's correction] the possibility that he [Sanders] becomes president and enacts capitalist unfriendly policies.”

Here’s how major healthcare stocks did Wednesday:

United Health  (UNH) - Get Report: +9.69%

CVS  (CVS) - Get Report (owns Aetna): 5.79%

Cigna  (CI) - Get Report : +10.87%

These stocks have a combined market capitalization of roughly $435 billion, about 1.5% of a total U.S. stock market worth roughly a tad under $30 trillion.

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