We just heard from some of the world's most important corporations, and there's a lot of new information to unpack.
The largest health insurance company in the world was front and center for us.
In addition, we heard from a few of the largest money center and superregional banks.
A few reactions raised red flags for stock market bulls, so let's talk about it.
Here are the latest earnings reactions from the S&P 500:
*click the image to enlarge it
Morgan Stanley's reaction was positive and similar to the other large financial stocks that reported on Wednesday.
On the flip side, the market hated the reports from the superregional banks. Even the stocks that beat top and bottom line expectations were punished.
The main driver of these adverse reactions to these stocks was weak guidance.
Moreover, these companies haven't been able to increase their net interest margins in a rising rate environment like the big banks have, and we expect that to continue being a problem for the foreseeable future.
UnitedHealth $UNH reported another disappointing quarter. The market has been concerned with its rising medical care ratio, which measures how much premium revenue is spent on medical care services.
The market has punished UNH for its last 2 earnings reports:
As you can see, UnitedHealth hasn't been punished this severely for reporting since 2008. Several quarters after this happened last time, the stock entered one of the most epic uptrends ever.
It ballooned into a significant component of the world's most important index, the Dow Jones Industrial Average. It's the second-largest hold, accounting for nearly 8% of the entire index.
It's also 1% of the S&P 500.
While it's unclear if the stock will recover like it did decades ago, here's what we know. 👇
Something changed when the UnitedHealthcare CEO was assassinated:
Several weeks after UNH had its worst earnings reaction since 2008, Brian Thompson (the CEO) was assassinated, and the stock has been down only since then.
This is occurring in the context of a long-term uptrend, so we want to give the bulls the benefit of the doubt. However, the stock failed to hold its breakout from a prolonged consolidation, which is bearish.
As the legendary market wizard Marty Schwartz said, "From failed moves come fast moves in the opposite direction."
