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The stock market had a down day on Thursday, but it wasn't a total downer. Buy-the-dip tendencies were evident yet again with the indices finishing the day on an upswing that helped pare larger losses.
Those tendencies are on display again this morning -- not in earnest necessarily, but they are there.
One wouldn't know that looking only at the Dow Jones Industrial Average futures. They are down 261 points and are trading 0.6% below fair value. That weakness is predominately an isolated story. Shares of UnitedHealth Group (UNH), which is the second highest-priced stock in the price-weighted average, are down 12.6% following a Wall Street Journal report that the DOJ has launched a civil fraud investigation into UNH's Medicare Advantage billing practices.
This news has undercut the stocks of other Medicare Advantage providers, like Humana (HUM), CVS Health (CVS), Cigna (CI), and Centene (CNC), that will also act as a major drag on the S&P 500 health care sector.
Notably, the broader market is holding firm. The S&P 500 futures are up four points and are trading 0.1% above fair value, and the Nasdaq 100 futures are up 87 points and are trading 0.4% above fair value.
Some modest gains in the mega-cap space have offered some foundational support that has more than outweighed the impact of losses in stocks like Akamai Technologies (AKAM), Rivian Automotive (RIVN), RingCentral (RNG), and Dropbox (DBX), which are down 9.6%, 8.2%, 4.3%, and 6.5%, respectively, following their earnings reports.
The combined market cap of that cohort, though, is tantamount to a rounding error for a mega-cap component. Frankly, the 4.1% gain in Booking Holdings (BKNG) after its better-than-expected earnings report, and view that it continues to see healthy demand for leisure travel globally, is enough in its own right to offset those losses.
How the market starts on this options expiration day, though, won't be as important as how it finishes. Even though there were buy-the-dip tendencies yesterday, it was clear that some of the air underpinning many of this year's best-performing stocks got sucked out of them.
Market participants will be watching to see if they continue to lose oxygen today or if they get some fresh air. In the meantime, the standing of the mega-cap stocks will dictate how the S&P 500 and Nasdaq Composite stand as the session unfolds.
Today's session will include several economic releases, namely the preliminary S&P Global US Manufacturing and Services PMI readings for February at 9:45 a.m. ET, and the January Existing Homes Sales Report and final February University of Michigan Index of Consumer Sentiment at 10:00 a.m. ET.
The Treasury market is calm ahead of that data, which is providing some calm for the broader equity market. The 2-yr note yield is unchanged at 4.27% and the 10-yr note yield is unchanged at 4.50%.
