UnitedHealth Group [NYSE: UNH] was one of the big gainers in Thursday trading. This followed a move by President Trump to withdraw a proposal to remove rebates from government drug plans. The proposal was aimed at cutting the cost of prescription drugs, especially for consumers. It would have cut the profits of prescription benefit managers such as UNH.
Under the deal, PBMs would negotiate rebates with drug manufacturers, a move that would bring down the cost of these drugs. The proposal was also aimed at passing down a fee to PBMs for drugs in their plan, and by extension have them give discounts to consumers. Without this proposal, it basically means that the PBMs will continue to keep the rebates as profits. This explains why they are bullish at the moment, with UNH closing Thursday’s trading session with gains of 5.53%.
If the charts are anything to go by, then chances are that UNH could remain bullish in Friday trading. After the initial price push that saw it hit a high of $261.69, it entered a consolidation phase. If it opens the day above yesterday’s high of $261.69, it will be an indicator that bullish sentiment is still strong.
Another factor that could help propel UNH and other stocks in the day is the dovish outlook of the Fed. In his mid-week comments, the Fed Chairman Jerome Powell hinted at a possible rate cut. This has weakened the dollar, but pushed up bullish sentiment in the stock markets. For stocks such as UNH that now have other positive news supporting them, bullish sentiment is likely to remain prevalent on the last day of the trading week. The S&P 500 is already showing bullish signals, as it closed Thursday’s session in the green, with gains of 0.22%. It’s a good indicator that investors are bullish on the markets, now that a rates cut seems favorable at the moment.