U.S. stocks were mixed on Tuesday, with strength in technology lifting the S&P 500 and Nasdaq to fresh gains while a steep selloff in health insurers dragged heavily on the Dow. Investors navigated a dense earnings calendar alongside weakening consumer confidence and renewed political uncertainty, keeping volatility elevated beneath the surface.
The tech-heavy Nasdaq Composite rose about 0.9%, while the S&P 500 advanced roughly 0.4%, pushing the benchmark deeper into record territory. In contrast, the Dow Jones Industrial Average fell close to 1%, weighed down by a nearly 20% plunge in UnitedHealth after earnings and policy-related disappointment rippled through the managed-care sector.
Market Movers:
- UnitedHealth (UNH) -19%: Shares plunged despite a quarterly profit beat after revenue missed expectations and the Trump administration proposed nearly flat Medicare Advantage reimbursement rates for 2027. The policy outlook sparked broad concern over profitability across the managed-care industry, amplifying the stock’s decline.
- Humana (HUM) -21% and CVS Health (CVS) -10%: Health insurers sold off sharply after CMS proposed a headline reimbursement increase of just 0.09% for Medicare Advantage plans. While officials noted higher effective payments when risk adjustments are included, investors focused on the immediate pressure to margins.
- General Motors (GM) +6%: Shares climbed after the automaker delivered a stronger-than-expected quarter, raised its dividend, and announced a $6 billion share buyback. Management struck an optimistic tone on U.S. auto demand and margin recovery, easing concerns tied to EV-related write-downs.
- Cloudflare (NET) +19%: The stock surged as investors piled into AI-adjacent infrastructure names, with analysts pointing to rising interest in AI agents that could drive long-term demand for Cloudflare’s edge computing platform. The rally extended a rebound following recent weakness.
- Corning (GLW) +12%: Shares jumped after reports that Meta will commit billions of dollars through 2030 for fiber-optic cable to support its AI data-center buildout. The deal reinforced expectations of sustained hyperscaler spending on network infrastructure.
Tech Optimism Builds Ahead of Megacap Earnings
Tech stocks continued to set the tone for markets as investors positioned ahead of results from several “Magnificent Seven” companies. Meta, Microsoft, and Tesla are scheduled to report earnings on Wednesday, with Apple following on Thursday, placing AI spending plans and cloud demand in focus. Upbeat commentary from memory chipmakers earlier in the week has helped bolster confidence that the AI trade still has legs, even after bouts of volatility tied to supply constraints and geopolitical risks. For now, tech leadership remains the primary engine pushing broader indexes higher.
Policy Shock Hits Health Insurers
While tech rallied, healthcare fell behind. The proposed Medicare Advantage reimbursement framework rattled investors who had been counting on higher rate increases to offset rising medical costs. UnitedHealth’s revenue miss and higher medical care ratio only deepened those concerns. The strong reaction underscores how sensitive the sector remains to regulatory signals, particularly as inflation pressures linger and utilization trends remain elevated. Analysts warned that earnings visibility for insurers could stay clouded until clearer guidance emerges from policymakers.
Consumer Confidence Slumps as Uncertainty Grows
Adding to the cautious undertone, consumer confidence fell to its lowest level since 2014, with households citing inflation, tariffs, and economic uncertainty. Expectations for future business conditions and the labor market weakened notably, raising fresh questions about the durability of consumer-driven growth. The soft sentiment reading arrives just as the Federal Reserve begins its two-day policy meeting. While the central bank is widely expected to hold rates steady, investors are increasingly focused on how weakening confidence could shape the timing of future cuts.
Looking Ahead
Markets now turn their attention to a pivotal midweek stretch, with major tech earnings and the Fed’s policy decision likely to dictate near-term direction. Strong results from megacap tech could extend the Nasdaq’s leadership, while any disappointment may test stretched valuations. At the same time, fallout from healthcare policy changes and declining consumer confidence could inject fresh volatility. With earnings, monetary policy, and political risks colliding, investors are bracing for a decisive few days that may set the tone for the rest of the quarter.