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What You Need To Know Ahead Of UnitedHealth’s Earnings
UnitedHealth Group (UNH) Will Repor...
Investopedia
24 m
15
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UnitedHealth Group (UNH) will report third-quarter earnings before the opening bell Tuesday, with investors likely to be watching for continued growth from its Optum division.
The health insurer is expected to post third-quarter revenue of $99.3 billion, an over 7% increase year-over-year, and net income of $6.16 billion, up from $5.84 billion in the prior-year quarter.
Last quarter, revenue from UnitedHealth's Optum division jumped 11.7% year-over-year to $62.9 billion as it added more patients at Optum Health and raised the number of customers using its Optum Rx pharmacy service.
Analysts expect $63.7 billion this quarter, which would represent a 12% increase. The number of Optum Health patients and those using the OptumRx pharmacy service are also expected to grow from the year-ago quarter.
UnitedHealth may also provide updates on its lawsuit against the Centers for Medicare & Medicaid Services (CMS) after the agency downgraded the quality rating of its Medicare Advantage plans.
UnitedHealth alleges that CMS lowered its ratings “based on an arbitrary and capricious assessment of how [UHC’s] call center handled a single phone call that lasted less than ten minutes,” according to a complaint filed in a Texas district court.
The company had 7.7 million members on Medicare Advantage plans at the end of the second quarter. That could change with the open enrollment period beginning on Oct. 15.
UnitedHealth shares have gained nearly 14% in 2024 so far, at $598.05 as of Friday's close.
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Investopedia
1 h
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The yield on 10-year Treasurys crossed 4.1% for the first time since July this week, extending an ascent that has paradoxically coincided with the beginning of a rate-cutting cycle.
The yield on the 10-year Treasury has risen by about half a percentage point since dipping below 3.6% on Sept. 17, the day before the Federal Reserve lowered its benchmark federal funds rate from its highest level in more than 20 years.
Stock investors are often unnerved by rising yields for a few reasons. First, they draw money away from the stock market and lower stock valuations by increasing the yield on lower-risk fixed-income securities. Second, they discourage consumer and business borrowing, weighing on economic growth and corporate profits in the process.
Yet rising Treasury yields haven't stood in the way of stocks in recent weeks. The S&P 500 on Friday closed at its 45th record high of the year as the 10-year yield was at a two-month high. Major stock indexes have posted gains in five consecutive weeks.
Stocks have been supported lately by growing conviction on Wall Street that the U.S. economy’s strength can support corporate profits. Earnings have mostly held up through years of elevated interest rates, and the Fed’s easing cycle—whether aggressive or more measured—should mostly be a tailwind for business and stocks.
Bank of America analysts expect S&P 500 earnings to grow 15% next year. They also forecast growth will continue to broaden beyond the Magnificent Seven—Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Alphabet (GOOG; GOOGL), Amazon (AMZN), Meta (META), and Tesla (TSLA)—which accounted for an outsized share of the index’s earnings growth and market performance in 2023. The "Other 493," the earnings of which were declining or stagnant throughout 2023 and early 2024, are expected to record double-digit earnings growth in each of the next five quarters.
According to one study from British asset manager Schroders, rising yields compressed stock valuations in 6 of the 11 periods between 1970 and 2021 that they characterize as "rising yield environments." And yet stocks advanced in all but two of those periods because earnings grew fast enough to offset lower valuations.
Few experts expect the 10-year yield to rise much further than it already has, another reason yields are unlikely to derail the bull market.
“The US economy is healthy & unlikely to see recession near term but it also doesn't appear to be meaningfully re-accelerating,” wrote Bank of America analysts in a recent note. They expect the Fed to continue cutting rates next year, and forecast the 10-year yield will sit around 3.75% at the end of both 2024 and 2025.
Lawrence Gillum, Chief Fixed Income Strategist at LPL Financial, sees a little more room for rates to tick up but still expects yields to fluctuate within a 3.75-4.25% range throughout the rest of the year.
The surprising strength of the U.S. economy is a key reason for the peculiar divergence between interest rates and yields. The unemployment rate declined in September when the U.S. added far more jobs than expected, according to data from the Labor Department released last week. And inflation ran slightly hot in September, according to data released Thursday.
That’s led Wall Street to doubt the Fed will need to continue aggressively cutting rates to prevent an economic crisis. Last month, the prevailing view among market participants was that the Fed would lower rates by another 75 basis points (0.75%) before the end of the year. Now, the market sees no chance the Fed will move that quickly, according to fed fund futures trading data.
As the outlook for interest rates has changed, so has the market price of Treasurys and, subsequently, their yields, which move in the opposite direction of prices. When investors think that interest rates are going to be lower in the future than they are now, that increases the price—and decreases the yield—of Treasurys trading on the secondary market because they’re expected to pay a higher coupon than future debt. The opposite happens when investors think interest rates will be higher in the future, and the strength of recent labor market data has convinced Wall Street of that.
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Investopedia
4 hrs
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Americans are more confident about the housing market than they have been in over two years, which could be the solution to more affordable housing costs.
The Home Purchase Sentiment Index, conducted by Fannie Mae and released this week, increased by 1.8 points to 73.9 in September. Most of this was steered by high optimism that mortgage rates would decline in the next 12 months.
Economists say that if the Federal Reserve continues to cut interest rates and the economy can remain steady, interest rates will continue on a downward trajectory despite an uptick in recent weeks.
“Following the release of a stronger-than-expected September jobs report, the 30-year fixed rate mortgage saw the largest one-week increase since April,” said Sam Khater, Freddie Mac’s chief economist in a press release. “However, we should remember that the rise in rates is largely due to shifts in expectations and not the underlying economy, which has been strong for most of the year."
During the pandemic, homeowners found low mortgage rates as the Federal Reserve dropped its federal funds rate to near zero in an effort to revive the economy and avoid a recession. Taking advantage of the record-low rates, many homeowners bought houses or refinanced mortgages in 2021.
In response to inflation heating up in 2021, the Fed raised its influential federal funds rate to a 23-year high. The fed funds rate is one of the main factors influencing mortgage rates, along with 10-year Treasury yields and competition among banks.
Because of that, as the fed funds rate rose, so did mortgage rates. Mortgage rates nearly doubled from the beginning of 2022 to the fall of 2023, leaving homeowners hesitant to trade in their low pandemic-era mortgage rates. This caused a lock-up in the housing market as fewer houses were listed for sale, pushing home prices up as demand outpaced supply.
However, as the market geared up for the Federal Reserve to cut rates in September, mortgage rates began to dip. That has encouraged more homeowners to list their homes and lifted the sentiment of Americans on the state of the housing market. Despite an uptick in recent weeks, mortgage rates have declined 1.25 percentage points over the last year, according to the latest mortgage rate information from Freddie Mac.
Although only 19% of respondents said now is a good time to buy a home, 65% said now is a good time to sell a home, both up from a year ago, according to the survey by Fannie Mae.
"Although mortgage rates have fluctuated recently, the recent declines may have offered some relief to homebuyers who have been grappling with high rates," said Realtor.com Economist Jiayi Xu.
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Instablog9ja
5 hrs
10
Some Nigerian women have debated that DNA test are baseless and not part of the Nigerian culture.
They shared their opinion while reacting to a post where a lady was recounting an incident in which her friend was battling for his life in the hospital after he discovered that the children father were not his. According to the ladies any child, born by a woman, regardless of the circumstances, belongs to her husband.
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Instablog9ja
19 hrs
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Music producer Samklef in response to singer Seun Kuti’s recent statement has called him daddy’s boy wey no learn work finish.
He said not one pass or present song of Seun Kuti can near any of his previous song release.
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