Key Takeaways
- The S&P 500 dropped 2.4% on Monday, April 21, as President Donald Trump scorned the head of the Federal Reserve and China cautioned its trading partners against adversarial deals.
- Shares of Universal Health Services sank following a report that government cost-cutters could target hospital chains' Medicaid profits.
- Capital One’s purchase of Discover Financial was approved by regulators, and the shares of both credit cards issuers rose.
Major U.S. stock indexes plunged at the start of this trading week. President Donald Trump increased his criticisms of Federal Reserve Chairman Jerome Powell while China warned that it would retaliate against countries who enter into trade agreements that are not in China’s interest.
The S&P 500 plummeted 2.4%, the Dow slid 2.5%, and the Nasdaq closed 2.6% lower.
Universal Health Services (UHS) shares plunged 10.2%, the most of any S&P 500 stock, after The Wall Street Journal reported that Republican officials interested in cutting costs could target Medicaid-related profits generated by hospital chains. According to the report’s findings, supplemental Medicaid payments accounted for over half of Universal Health Services’ pretax revenue in 2013.
Blackstone’s (BX) shares fell 7.8%. Blackstone CEO Stephen Schwarzman said that despite the company’s strong performance in private equity and credits, it was still unable to meet its profit forecasts.
The Wall Street Journal reported the Department of Energy was considering a significant cut of nearly $10 billion for clean energy projects. While the reduced funding may affect a wide range of energy technologies, nuclear power generators were among those who felt the pressure during Monday’s session. Vistra (VST), Constellation Energy, and CEG all saw their shares fall 7.7% and 6.8% respectively.
The Federal regulators approved Capital One Financial’s (COF’s) acquisition of Discover Financial Services, while the markets were closed, on Friday. The combined entity is expected to become the biggest credit card company based on outstanding customer balances. Discover Financial shares added 3.6% to notch the S&P 500’s top performance on Monday, the first trading session following the approval. Capital One shares rose 1.5%.
Shares in financial technology firm FidelityNational Information Services (FIS), gained 2.4% following Citi’s upgrade of the stock from “neutral”, and raising its price target. Analysts highlighted an agreement announced last week which helped Fidelity National increase its presence in the credit-card processing space. This suggests potential cross-selling with clients in banking.
Netflix (NFLX), shares rose 1.5% after analysts from a variety of research firms raised their price targets. The video streaming company beat estimates for sales and profits in its quarter results released on Thursday afternoon. Greg Peters, co-CEO of the company, highlighted Netflix’s resilience during the earnings call.
