Topline
The blue chip Dow Jones Industrial Average stock index suffered its worst day this year as shares of UnitedHealth Group sank Friday following a report on a fresh federal probe into the U.S.’ largest health insurer, and one Wall Street titan warned of the prospect of a broader stock market pullback.
UnitedHealth Group subsidiary UnitedHealthcare’s Minnesota headquarters.
Getty Images for People’s Action InstituteKey Facts
The blue chip Dow Jones Industrial Average slipped 1.7%, about 750 points, with UnitedHealth’s drop accounting for about half of the decline for the share-price weighted index of 30 American companies.
The index closed at its lowest level since Jan. 16.
UnitedHealth stock plummeted as much as 12.7%, or $64, to as low as $438.50 per share shortly after market open, knocking off roughly $35 billion in market capitalization for the company now valued at about $428 billion.
Even after losses trimmed to 7% by close, Friday was UnitedHealth stock’s worst percentage decline since October and its seventh-worst day of the last decade.
Losses extended past UnitedHealth, as the bellwether S&P 500 and the tech-heavy Nasdaq declined 1.7% and 2.2%, respectively, while big-name stocks including Nvidia (4%), Tesla (4.7%) and Walmart (2.5%) suffered notable pullbacks.
The Friday slump came as $2.7 trillion of options contracts expired, an event “which often leads to above average volatility,” noted Blue Chip Daily Trend Report’s chief technical strategist Larry Tentarelli in emailed comments, helping to explain the sizable drop amid a relatively quiet day for typical catalysts like quarterly earnings and major economic reports.
Crucial Quote
“I think the best gains have been had and wouldn’t surprise me to see a significant correction,” hedge fund billionaire Steve Cohen cautioned Friday about the broader stock market, expressing bearishness about President Donald Trump’s tariffs. The Point72 Asset Management founder is among the 100 richest people in the world with a net worth of $21 billion, according to Forbes’ calculations.
Why Did Unitedhealth Stock Drop?
The Wall Street Journal reported the Department of Justice is conducting a civil fraud probe into UnitedHealth’s billing practices for Medicare, the federal government-subsidized health insurance program. The federal investigation is focused on UnitedHealth’s alleged tendency to encourage medical diagnoses, which lead to extra payments for its Medicare Advantage patients, according to the Journal. UnitedHealth Group and the Justice Department declined to comment on the report. UnitedHealth’s health insurance subsidiary, UnitedHealthcare, generated $139.5 billion from Medicare and retirement plans in 2024. That accounted for more than a third of the parent company’s $400 billion in sales last year. yet Friday’s “share decline looks like an overreaction relative to the potential risks for UnitedHealth,” Morningstar analyst Julie Utterback wrote in emailed comments to Forbes. Utterback noted UnitedHealth’s health insurance unit only accounts for slightly less than half of the company’s profits (the remainder come from its Optum healthcare provider), and only about 15% of its health insurance members are on Medicare Advantage plans. “In this post-shooting and DOGE-era, regulators may be emboldened to make more changes than they otherwise would have on insurers that are seen to be fleecing the system,” Utterback explained about UnitedHealth’s massive drop.
Key Background
Utterback referenced the Dec. 4 killing of UnitedHealthcare CEO Brian Thompson at UnitedHealth’s annual investor conference and the Elon Musk-led Department of Government Efficiency (DOGE), which has targeted Medicare in its cost-cutting initiatives. Thompson’s killing, which was allegedly triggered by his accused murderer’s disdain for the U.S. healthcare system, led to a sharp selloff in UnitedHealth stock, which fell 18% in the two weeks following Thompson’s death. Shares of the insurer are down 25% since Dec. 4 following Friday’s dive. Stocks remain broadly in the green in 2025, with the Dow and S&P up more than 2% apiece.
Further Reading
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