Centene Corporation operates as a healthcare enterprise that provides programs and services to under-insured and uninsured families, commercial organizations, and military families in the United States. The company operates through Medicaid, Medicare, Commercial, and Other segments. The Medicaid segment offers health plan coverage, including medicaid expansion, aged, blind, disabled, children's health insurance program, foster care, medicare-medicaid plans, long-term services and support. This segment also provides healthcare products. The Medicare segment offers special needs and medicare supplement, and prescription drug plans. The Commercial segment provides health insurance marketplace product for individual, small, and large group commercials. It also operates clinical healthcare and pharmacies, as well as offers dental and speech therapy services. In addition, the company engages in the government contracts business under the TRICARE program and other healthcare related government contracts. It provides services through primary and specialty care physicians, hospitals, and ancillary providers. Centene Corporation was founded in 1984 and is headquartered in Saint Louis, Missouri.

Centene appears undervalued on valuation multiples, but the quality of current earnings and profitability does not yet support a strong upside without caveats. P/S of 0.15, P/B of 1.36, and P/FCF of 3.45 are noticeably below industry medians, which usually supports a higher fair value level; however, this is partially offset by weak margins and unstable efficiency metrics. P/E is formally zero due to reporting specifics, so it cannot be used as a reliable signal of overvaluation or undervaluation. Revenue remains very large and generally growing, while net income and operating income in TTM are positive, confirming scale and the ability to generate earnings. At the same time, ROE, ROA, ROI, operating margin, and net margin in TTM are all zero, which worsens earnings quality and makes the assessment more cautious. Gross margin of around 7.8% is low in absolute terms and below the industry benchmark, limiting the potential for profit expansion without improvements in healthcare economics and cost control. The cash position is strong: cash on hand is high, and the current ratio is above 1, reducing short-term liquidity risk. Debt load is moderate in absolute terms, but debt/equity is above the industry median, so the balance sheet cannot be called risk-free. Equity and net worth have increased, supporting financial stability, although the quick ratio remains weak and points to limited immediate liquidity. EBITDA and gross profit look better than a year ago, but the trend is not smooth enough to justify an aggressive increase in the target valuation. There is no dividend, so the investor does not receive additional support in the form of cash yield. Overall, the fundamentals support a moderately positive view on the stock, but due to weak profitability, high dependence on operating discipline, and the debt profile, the adjustment should be conservative.

Centene Corporation

Сильный индекс, значительно упал. Быки в растерянности.

Strong index, significantly down. The bulls are confused.

Сильный индекс, значительно упал. Медведи в растерянности.

Strong index, significantly down. The bears are confused.

Слабый индекс, незначительно вырос. Рынок не поддерживает быков.

Weak index, slightly up. The market does not support the bulls.

Слабый индекс, незначительно упал. Рынок на стороне медведей.

Weak index, slightly down. The market is on the bears' side.

Слабый индекс, незначительно вырос

Слабый индекс, незначительно упал

Centene looks cheap on P/S, P/B, and P/FCF, but weak profitability and elevated leverage limit the potential for an upward rerating.

Centene Corporation CNC is reshaping its Medicare Advantage (“MA”) business by simplifying its plan footprint and placing greater emphasis on dual-eligible members. The strategy aims to improve the quality of its MA portfolio while better aligning resources with markets and member groups where CNC has an established healthcare presence.
The broader Medicare segment also showed improving economics. The segment’s health benefits ratio improved to 89.5% in the second quarter of 2026 from 90.9% a year ago, reflecting fundamental outperformance in both Medicare Advantage and PDP, along with favorable Medicare programmatic items and the absence of a 2026 premium deficiency reserve for MA. MA, which accounts for more than 40% of Medicare segment revenues in the second quarter of 2026, is moving closer to breakeven for full-year 2026. D-SNP members now account for about 40% of CNC’s MA portfolio.
For 2027, Centene plans to further simplify its MA footprint and focus its benefits on dual-eligible members, using its Medicaid experience to support more integrated care. This targeted approach could also reduce complexity and improve operating efficiency across the business.
The margin recovery path still depends on medical-cost control and Stars execution. Medical costs remain elevated versus historical levels, while changes in Stars methodology and higher cut points could pressure reimbursement. Even so, portfolio optimization, SG&A management and a greater focus on duals could support CNC’s target of achieving breakeven or better Medicare Advantage results in 2027, followed by further margin improvement.
How Are Competitors Faring?
Some of CNC’s major competitors in the healthcare service provider space are UnitedHealth Group Incorporated UNH and Elevance Health, Inc. ELV.
UnitedHealth Group is prioritizing Medicare Advantage margin recovery over membership growth, using repricing, benefit redesign and market exits to counter elevated medical costs and funding pressure. UNH’s medical care ratio improved to 86.7% in the second quarter of 2026 from 89.4% a year ago.
Elevance Health is taking a more selective approach to Medicare Advantage, accepting membership declines while repositioning the business for sustainable returns. Higher medical costs remain a pressure point, though pricing discipline and Carelon-led cost management could strengthen future profitability.
Centene’s Price Performance, Valuation & Estimates
Shares of CNC have surged 59% in the year-to-date period compared with the industry’s growth of 20.3%.
From a valuation standpoint, Centene trades at a forward price-to-earnings ratio of 12.57, below the industry average of 15.80. CNC carries a Value Score of A.
The Zacks Consensus Estimate for Centene’s 2026 earnings is pegged at $4.89 per share, implying 135.1% growth from the year-ago period.
CNC stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Can Centene's Medicare Advantage Strategy Unlock Better Margins?

The S&P 500 Index ($SPX) (SPY) is down -0.25% today, the Dow Jones Industrial Average ($DOWI) (DIA) is down -0.69%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.12%. E-mini S&P futures (ESU26) are down -0.92%, and September E-mini Nasdaq futures (NQU26) are up +0.11%.
Stock indexes are mostly lower today, with the Dow Jones Industrial Average falling to a 5-week low. The broader market is under pressure for a second day amid mounting inflation risks. WTI crude oil prices are up more than +2% today to a 3.25-month high amid escalating hostilities in the Middle East, heightening concerns about energy flows through the Strait of Hormuz. The surge in energy prices is boosting inflation expectations and pushing bond yields higher. The 10-year T-note yield rose to 4.82% today, the highest in 2.75 years. The higher bond yields are weighing on stocks.
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On the positive side, strength in chipmakers and AI-infrastructure stocks is supporting the Nasdaq 100 index. Energy producers are also climbing today on the strength in crude oil prices.
Also, an escalating trade war between the US and Canada is weighing on market sentiment. On Tuesday, Canada imposed tariffs of 15% to 50% on hundreds of US goods in retaliation for the US action last month to impose 50% tariffs on $20 billion of imports from Canada. The US responded by moving to block imports of some Canadian products and slapping new tariffs on others, as well as seeking to bar Canadian companies from selling to US government contractors.
US MBA mortgage applications fell -2.7% in the week ended September 4, with the purchase mortgage sub-index down -0.2% and the refinancing mortgage sub-index down -6.2%. The average 30-year fixed-rate mortgage rose +6 bp to a 14-month high of 6.85% from 6.79% in the prior week.
Oct WTI crude oil prices (CLV26) are up more than +2% today at a 3.25-month high due to the latest escalation of hostilities in the Middle East. The US destroyed five Iranian tankers carrying crude in response to two attempts by Iran to hit US Navy ships with ballistic missiles. Iran responded by firing missiles at a US air base in Jordan and warning ships in the Persian Gulf that they would be attacked.
The markets are discounting a 64% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.
Overseas stock markets are mixed today. The Euro Stoxx 50 fell to a 5-week low and is down -1.61%. China's Shanghai Composite closed up +0.28%. Japan's Nikkei-225 Stock Average closed down -0.19%.
Interest Rates
December 10-year T-notes (ZNZ6) are down by -3 ticks today. The 10-year T-note yield is up +0.8 bp to 4.810%. T-notes fell to a 2.75-year nearest-futures low today, and the 10-year T-note yield rose to a 2.75-year high of 4.816%. T-notes are under pressure from higher crude oil prices, which are boosting inflation expectations, as WTI crude oil is up more than +2% to a 3.25-month high. Supply pressures are also weighing on T-note prices as the Treasury will auction $39 billion in 10-year T-notes later today.
European government bond yields are moving higher today. The 10-year German bund yield climbed to a new 15-year high of 3.423% and is up +5.0 bp to 3.416%. The 10-year UK gilt yield is up +5.1 bp to 5.225%.
French July manufacturing production unexpectedly fell -0.8% m/m, weaker than expectations of a +0.4% m/m increase.
Markets are discounting a 100% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.
US Stock Movers
Weakness in health insurance stocks is weighing on the broader market today. UnitedHealth Group (UNH)is down more than -5% to lead losers in the Dow Jones Industrials, and Centene (CNC) is down more than -4%. Also, Humana (HUM) and Molina Healthcare (MOH) are down more than -3%, and CVS Health Corp (CVS) and Elevance Health (ELV) are down more than -2%. In addition, Cigna Group (CI) is down more than -1%.
Chipmakers and AI-infrastructure stocks are moving higher today, a positive factor for the overall market. Marvell Technology (MRVL) is up more than +5% to lead gainers in the S&P 500 and Nasdaq 100. Also, ARM Holdings (ARM) is up more than +4%, and Advanced Micro Devices (AMD), Micron Technology (MU), and SanDisk (SNDK) are up more than +3%., In addition, Western Digital (WDC) is up more than +2%, and Qualcomm (QCOM) is up more than +1%.
Energy producers and service providers are moving higher today, with WTI crude up more than +2% at a 3.25-month high. APA Corp (APA), Baker Hughes (BKR), Diamondback Energy (FANG), ExxonMobil Holdings (XOM), Halliburton (HAL), Marathon Petroleum (MPC), Occidental Petroleum (OXY), and SLB Ltd (SLB) are up more than +2%, and Chevron (CVX) is up more than +2% to lead gainers in the Dow Jones Industrials. Also, ConocoPhillips (COP) and Devon Energy (DVN) are up more than +1%.
ServiceTitan (TTAN) is down more than -19% after reporting a Q2 EPS loss of -26 cents, a bigger loss than the consensus of -25 cents.
Casy’s General Stores (CASY) is down more than -17% to lead losers in the S&P 500 after reporting a Q1 gross margin of 21.8%, below the consensus of 22.3%.
Chewy (CHWY) is down more than -7% after forecasting a sequential decline in Q3 gross margin, due to a timing shift as certain rebate benefits shifted from the second half of the year into Q2.
Smithfield Foods (SFD) is down more than -6% after cutting its Q3 earnings outlook, citing “continued compression in the industry fresh pork market spread and lower hog prices.”
Booking Holdings (BKNG) is down more than -4% to lead losers in the Nasdaq 100 after losing an EU court fight over its takeover of Sweden’s Etraveli Group, when a judge said regulators were right to conclude that the planned buyout threatened fair competition.
Dyne Therapeutics (DYN) is down more than -3% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $10.
Chime Financial (CHYM) is up more than +7% after boosting its full-year revenue forecast to $2.76 billion to $2.77 billion from a previous forecast of $2.73 billion to $2.75 billion, stronger than the consensus of $2.74 billion.
Meta Platforms (META) is up more than +5% to lead gainers in the S&P 500 and Nasdaq 100 after analysts reported positive reviews of the company’s debut of Muse, an AI assistant.
Dell Technologies (DELL) is up more than +5% after Evercore ISI raised its price target on the stock to $650 from $575.
Earnings Reports (9/9/2026)
AeroVironment Inc (AVAV), Chewy Inc (CHWY), Cooper Cos Inc/The (COO), Core & Main Inc (CNM), SailPoint Inc (SAIL), Sunbelt Rentals Holdings Inc (SUNB).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Stocks Pressured as Inflation Fears Boost Bond Yields

UnitedHealth Group Inc. UNH is making artificial intelligence a bigger part of its strategy to strengthen Optum Insight’s growth. The company plans to invest nearly $1.5 billion in AI-related initiatives in 2026, with about one-third earmarked for software products and platforms. The spending is supporting a broader shift toward an AI-first software and services model, giving Optum Insight an opportunity to develop new revenue streams while improving healthcare workflows.
The strategy is moving beyond experimentation into commercial products. Optum Insight is expanding AI capabilities across autonomous coding, digital prior authorization, real-time payer-provider interfaces and clinical quality and safety tools. Digital prior authorization is showing early traction, with AI achieving a 96% first-pass approval rate while retaining human review for cases that are not approved. These solutions could strengthen Optum Insight’s value proposition as payers and providers seek to reduce administrative costs.
Value Connect offers another example of AI translating into measurable customer benefits. The platform, embedded within provider workflows and electronic health records, has helped early customers achieve a 17% reduction in pharmacy costs. Demonstrated savings could support wider adoption as healthcare organizations increasingly seek technology that delivers measurable financial and clinical benefits.
The underlying business is also gaining momentum. Optum Insight generated $5.4 billion in second-quarter 2026 revenues, while operating earnings increased 13.6% year over year and margin improved to 25.3%. As AI products move toward broader commercialization, the strategy could provide another growth lever. Converting early customer results into wider adoption and recurring revenue will be key to strengthening Optum Insight’s growth trajectory.
How Are Competitors Faring?
Some of UNH’s major competitors in the healthcare service provider space are Humana Inc. HUM and Centene Corporation CNC.
Humana is expanding AI across care management, prior authorization and member engagement to improve efficiency and health outcomes. HUM is also using predictive analytics to identify high-risk members earlier, supporting value-based care while helping manage medical costs and streamline healthcare delivery.
Centene is using AI to strengthen payment integrity and manage rising healthcare costs. CNC’s advanced analytics help detect suspicious claims, identify billing anomalies and improve medical cost management, supporting margins while enhancing oversight across its government-sponsored healthcare programs.
UnitedHealth’s Price Performance, Valuation & Estimates
Shares of UNH have gained 41.9% over the past six months compared with the industry’s rise of 41.7%.
From a valuation standpoint, UnitedHealth trades at a forward price-to-earnings ratio of 18.48, above the industry average of 16.02. UNH carries a Value Score of B.
The Zacks Consensus Estimate for UnitedHealth’s 2026 earnings is pegged at $19.82 per share, implying 21.2% growth from the year-ago period.
UNH stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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Can UnitedHealth's AI Strategy Strengthen Optum Insight's Growth?

Wall Street has maintained its northbound journey in 2026 albeit at a slow pace after an astonishing rally in the last three years. Several stocks have jumped this year. Here, we have five stocks that have surged year-to-date and are currently undervalued.
These stocks currently carry a top Zacks rank, indicating more price upside in the near term. The combination of a top Zacks rank and undervaluation should ensure a continued rally for these stocks in 2026. It is prudent to invest in these stocks now as they are unlikely to stay undervalued for a long time.
These stocks are: Super Micro Computer Inc. SMCI, Archer-Daniels-Midland Co. ADM, The Allstate Corp. ALL, Centene Corp. CNC and Avnet Inc. AVT. Each of our picks currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our five picks year-to-date.
Super Micro Computer Inc.
Super Micro Computer remains positioned to benefit from expanding artificial intelligence (AI) infrastructure demand, supported by rapid adoption of new GPU platforms, its modular Building Block architecture, liquid-cooling expertise and a broader DCBBS offering. SMCI’s strong customer partnership combined with record backlog, rising shipments and expanding product portfolio, positions the company to benefit in the long term.
Solid Estimate Revisions
Super Micro Computer has an expected revenue and earnings growth rate of 71.8% and 22%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 30.3% over the last 30 days.
SMCI has an expected revenue and earnings growth rate of 19.6% and 18.7%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 42.2% over the last 30 days.
Attractive Valuation
The stock has a forward price/earnings (P/E) of 8.94X, compared with the industry’s P/E of 10.36X and the S&P 500’s P/E of 18.52X. It has a price/sale (P/S) of 0.67X, compared with the industry’s P/S of 5.32X and the S&P 500’s P/S of 3.09X. SMCI has a price/book (P/B) of 2.32X, significantly lower than the industry’s P/B of 16.38X and the S&P 500’s P/B of 3.71X.
Archer-Daniels-Midland Co.
Archer-Daniels-Midland has been benefiting from its strategic endeavors. ADM continues to advance its Optimize, Drive and Grow pillars, enhancing productivity, accelerating cost savings, expanding BioSolutions and leveraging digital tools to unlock margin opportunities and boost customer reach. ADM’s Human Nutrition unit is gaining from Flavors, Decatur East and emerging demand for natural ingredients.
Solid Estimate Revisions
Archer-Daniels-Midland has an expected revenue and earnings growth rate of 6.6% and 52.2%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 8.5% over the last 60 days.
ADM has an expected revenue and earnings growth rate of 1.4% and 3.5%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 8.4% over the last 60 days.
Attractive Valuation
The stock has a forward P/E of 16.20X, compared with the industry’s P/E of 13.48X and the S&P 500’s P/E of 18.52X. It has a P/S of 0.50X, compared with the industry’s P/S of 0.91X and the S&P 500’s P/S of 3.09X. ADM has a P/B of 1.73X, compared with the industry’s P/B of 0.98X and the S&P 500’s P/B of 3.71X.
The Allstate Corp.
The Allstate has been benefiting from sustained premium growth, expanding market share, and stronger underwriting performance. ALL’s Property-Liability premiums earned rose 4.7% year over year in the first half of 2026, while policies in force increased 2.6%. Protection Services revenues grew 7.5%, driven by Allstate Protection Plans and Roadside. ALL’s Portfolio streamlining, Transformative Growth, and cost discipline are also strengthening profitability.
Solid Estimate Revisions
The Allstate has an expected revenue and earnings growth rate of 5% and 1.9%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 2.1% over the last seven days.
ALL has an expected revenue and earnings growth rate of 4% and -21%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 1% over the last seven days.
Attractive Valuation
The stock has a forward P/E of 7.31X, compared with the industry’s P/E of 11.58X and the S&P 500’s P/E of 18.52X. It has a P/S of 0.94X, compared with the industry’s P/S of 1.35X and the S&P 500’s P/S of 3.09X. ALL has a P/B of 2.07X, compared with the industry’s P/B of 1.68X and the S&P 500’s P/B of 3.71X.
Centene Corp.
Centene has established itself as a national leader in healthcare services. It has a well-diversified healthcare network that primarily provides a set of services to government-sponsored healthcare programs, while serving underinsured and uninsured individuals through member-focused services.
CNC continues to benefit from disciplined pricing, portfolio optimization, favorable Medicaid rate actions, and strong Medicare Prescription Drug Plan momentum. Strategic acquisitions, partnerships, and ongoing enterprise optimization initiatives are strengthening care delivery, improving operational efficiency, and supporting long-term margin restoration.
Solid Estimate Revisions
Centene has an expected revenue and earnings growth rate of 0.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 3.2% over the last 30 days.
CNC has an expected revenue and earnings growth rate of -1.9% and 9.2%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 2.9% over the last 30 days.
Attractive Valuation
The stock has a forward P/E of 13.70X, compared with the industry’s P/E of 23.44X and the S&P 500’s P/E of 18.52X. It has a P/S of 0.16X, compared with the industry’s P/S of 0.30X and the S&P 500’s P/S of 3.09X. CNC has a P/B of 1.46X, compared with the industry’s P/B of 2.50X and the S&P 500’s P/B of 3.71X.
Avnet Inc.
Avnet enters fiscal 2027 with broad-based demand growth, longer lead times and higher backlog supporting further sales and earnings expansion. AVT’s mix of IP&E, embedded solutions, demand creation and supply-chain services should deepen customer ties and support operating leverage as volumes rise. Farnell’s recovery and tighter working-capital execution add to AVT’s upside, while lower leverage should gradually improve financial flexibility.
Solid Estimate Revisions
Avnet has an expected revenue and earnings growth rate of 23.5% and 84.3%, respectively, for the current year (ending June 2027). The Zacks Consensus Estimate for the current year’s earnings has improved 22.9% over the last 30 days.
AVT has an expected revenue and earnings growth rate of 4.4% and 7.4%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 19.9% over the last 30 days.
Attractive Valuation
The stock has a forward P/E of 8.81X, compared with the industry’s P/E of 15.49X and the S&P 500’s P/E of 18.52X. It has a P/S of 0.27X, compared with the industry’s P/S of 0.50X and the S&P 500’s P/S of 3.09X. AVT has a P/B of 1.50X, compared with the industry’s P/B of 1.55X and the S&P 500’s P/B of 3.71X.
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U.S. employers could face another sharp increase in healthcare costs in 2027, according to Marsh & McLennan Companies, Inc. MRSH. A Marsh survey of more than 1,800 employers shows that average health benefit costs per employee could climb 8.2% next year, even after companies take steps to curb the increase. If those measures were not in place, employers estimate costs could rise about 11%. The projected increase would be the steepest since 2003.
Marsh points to expensive new treatments, rising provider charges, greater use of GLP-1 weight-loss drugs, AI-assisted medical billing and out-of-network payments. GLP-1 usage alone is expected to add about one percentage point to health benefit cost growth in 2027.
Employers are responding by reworking plan structures. Marsh found that 59% of companies plan to make cost-reduction changes to their health plans for 2027, including higher deductibles. Roughly two-thirds of large employers also expect workers to shoulder a larger share of premium costs. Employee paycheck deductions could therefore rise faster than overall employer health benefit expenses.
Aon Echoes the Healthcare Cost Warning
Aon plc AON is pointing to a similar buildup in healthcare costs. It recently stated that it expects employer healthcare costs to rise 9.5% before mitigation, citing higher utilization, specialty-drug spending, provider pricing and billing practices. Marsh’s estimate is even steeper at 11% before cost-control actions, easing to 8.2% after planned measures.
Both firms see employers leaning more on data, plan redesign and care steering. Marsh says 12% of large employers plan to offer variable-copay plans, with adoption rising to 18% among companies with at least 20,000 employees. In addition, 58% of large employers rank steering workers toward higher-quality care among their top priorities.
For investors, the spending surge creates two distinct opportunities: stronger demand for benefits consulting and greater need for insurers that can help employers control costs.
For MRSH, this can support demand for benefits consulting, analytics, plan design and cost-management services. Employers facing costly claims and complex pricing need more help balancing affordability with coverage. That can create recurring advisory opportunities, deepen client relationships and increase demand for Marsh’s Health and Benefits expertise.
Marsh currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2026 EPS stands at $10.44, implying 7.1% year-over-year growth, while the 2027 estimate of $11.38 points to another 9% increase. Both estimates received two upward revisions over the past month and no downward revisions. MRSH also beat earnings estimates in each of the past four quarters, with an average surprise of 4.1%.
Marsh Price, Consensus and EPS Surprise
Rising Costs Create Both Risks and Opportunities for Health Insurers
Rising medical utilization and provider prices can squeeze health insurers when claims costs outpace premium increases. Yet employers looking to control healthcare spending may also place greater value on insurers and service platforms that can improve care management, pharmacy costs, network efficiency and benefit design.
UnitedHealth Group Incorporated UNH is well positioned to capture some of that demand through both UnitedHealthcare and Optum. Employers dealing with higher benefit costs may turn to UnitedHealthcare for plan redesign, care navigation and more efficient coverage options. Optum can benefit from increased use of pharmacy management, analytics, value-based care and other services aimed at reducing spending.
Higher drug costs can also support demand for Optum Rx’s purchasing scale and pharmacy capabilities. UnitedHealth’s integrated model can deepen employer relationships, generate recurring revenues and support cross-selling.
UNH’s commercial mix provides another layer of protection. At the end of the second quarter, it had about 22.3 million commercial fee-based members compared with 7.7 million commercial risk members. The larger self-funded base limits direct underwriting exposure to medical-cost volatility. Meanwhile, better cost trends and management actions helped reduce its medical care ratio to 86.7% from 89.4% a year earlier.
UnitedHealth also carries a Zacks Rank #2 at present. The consensus EPS estimates for 2026 and 2027 are $19.82 and $22.54, indicating growth of 21.2% and 13.7%, respectively. The estimates saw two and three upward revisions over the past month, with no downward moves. UNH topped earnings estimates in each of the past four quarters, delivering an average surprise of 12.1%.
UnitedHealth Price, Consensus and EPS Surprise
Meanwhile, Centene Corporation CNC offers a different way to play the same healthcare-cost trend.It has less direct exposure to employer-sponsored coverage because its commercial business is centered on the ACA Marketplace. Still, rising employer healthcare costs could open another growth avenue through Individual Coverage Health Reimbursement Arrangements, or ICHRAs.
ICHRAs allow employers to fund employees’ individual health plans instead of offering traditional group coverage.Centene says ICHRA adoption among businesses increased 34% from 2024 to 2025, pointing to growing interest in the model. Centene is positioning Ambetter Health Solutions to participate in that shift. The company is offering ICHRA-compatible coverage in 13 states in 2026. If ICHRA adoption continues to expand, Centene could add members, support premium growth and broaden its commercial reach.
Centene is not insulated from rising medical costs. However, its second-quarter commercial health-benefits ratio improved to 79.2% from 90.6% a year ago, helped by better pricing and risk transfer.
Centene currently sports a Zacks Rank #1 (Strong Buy). The consensus EPS estimate for 2026 is $4.89, implying a 135.1% year-over-year increase, while the 2027 estimate of $5.34 suggests 9.2% growth. Those estimates received two and three upward revisions, respectively, over the past month, with no downward changes. CNC beat earnings estimates in each of the last four quarters, posting an average surprise of 151.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Centene Price, Consensus and EPS Surprise
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
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Marsh (MRSH) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).

How Can Healthcare Inflation Fuel Growth for MRSH, UNH & CNC?

Oscar Health OSCR is a healthcare technology company built around a full-stack platform and a strong focus on member experience. Membership reached 2.96 million at the end of the second quarter of 2026, up 46% year over year, driven by above-market growth during open enrollment and solid retention. The performance indicates growing acceptance of Oscar’s products, geographic footprint and technology-enabled model in the Affordable Care Act marketplace. Moreover, the gains came despite weaker overall paid ACA enrollment following the expiration of enhanced subsidies, suggesting that Oscar captured market share rather than simply benefiting from industry growth.
Several structural opportunities could support further expansion. Also, Oscar plans to enter more than 150 additional metropolitan statistical areas by 2027, widening its addressable market. Individual Coverage Health Reimbursement Arrangements offer another potential enrollment channel. The company’s strategy also aligns with major healthcare trends, including rising costs, consumerization, digitization and demand for more personalized care, potentially strengthening its long-term competitive position.
However, enrollment remains seasonal. Although Oscar added roughly 1.1 million members during the first quarter of 2026, membership subsequently declined on a sequential basis as the annual enrollment effect faded. Higher premiums and reduced subsidies could also drive price-sensitive consumers, particularly younger and healthier individuals, out of the market. Oscar must therefore price its plans carefully while managing rising medical utilization.
A shift toward slower, more sustainable growth would not weaken the investment thesis if profitability and cash generation improve. It is better to focus on prioritizing retention, medical-loss-ratio stability, risk-adjustment trends and disciplined geographic expansion over headline membership growth.
What About Peers?
Molina Healthcare MOH is well positioned to benefit from several long-term trends supporting government-sponsored healthcare. As of June 30, 2026, total membership of Molina Healthcare decreased 14.3% year over year to around 4.9 million. Rising healthcare utilization, an aging U.S. population and strategic shift toward D-SNPs should support sustained membership growth for Molina Healthcare.
Centene Corporation CNC has shifted its strategy from prioritizing membership growth to improving earnings quality through disciplined pricing and portfolio optimization. Centene continues to benefit from a large and diversified membership base supported by contract wins and expansion in attractive government-sponsored programs. Centene is also shifting toward higher-quality membership, including growing PDP and dual-eligible Medicare exposure.
OSCR’s Price Performance
Shares of Oscar Health have gained 108.6% year to date, outperforming the industry.
OSCR’s Expensive Valuation
The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 4.5, higher than the industry average of 2.67.
Estimate Movement for OSCR
The Zacks Consensus Estimate for OSCR’s third-quarter 2026 earnings per share (EPS) witnessed southbound movement in the last 30 days, while that for fourth-quarter witnessed no movement in the same time frame. The consensus estimate for 2026 and 2027 earnings has moved 144.4% and 31.6% north, respectively, in the past 30 days.
The consensus estimates for OSCR’s 2026 and 2027 revenues and earnings indicate year-over-year decreases.
OSCR stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).

Oscar Health Membership Surges but Profitability Remains Key

Teladoc Health, Inc. TDOC is well-positioned for growth, supported by broad clinical capabilities, connected-care innovation, strategic acquisitions and an expanding international presence. Over the past six months, TDOC stock has gained 22.7% compared with the industry’s 5.9% growth.
With a market capitalization of approximately $1.1 billion, TDOC operates through two main segments — Integrated Care and BetterHelp. From a valuation standpoint, the stock appears to be trading at a discount. The company has a forward Price-to-Sales ratio of 0.47X, which is below the industry average of 0.53X.
Courtesy of solid prospects, TDOC currently carries a Zacks Rank #3 (Hold) and a Value Score of B.
Where Do Estimates for TDOC Stand?
The Zacks Consensus Estimate for Teladoc Health’s 2026 loss is pegged at 89 cents per share, suggesting a 21.9% year-over-year increase. In the past 30 days, it has witnessed three upward estimate revisions against one in the opposite direction. The consensus estimate for revenues is pegged at $2.4 billion for 2026.
TDOC beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 11.4%.
Teladoc Health, Inc. Price, Consensus and EPS Surprise
TDOC’s Growth Drivers
Teladoc Health’s growth prospects are increasingly tied to deeper penetration of its Integrated Care platform, particularly chronic care. Chronic Care Program enrollment reached 1.27 million at the end of June 2026, up 14% year over year, helped by greater adoption of multi-condition bundles. In the second quarter of 2026, Integrated Care revenues increased 0.7% year over year to $394.3 million, with hybrid care revenues rising 30%.
International expansion and broader distribution channels provide another avenue for growth. International revenues increased 7% year over year to $119.6 million in the second quarter of 2026. The company expects international revenues to grow in the high-single digit on an organic constant-currency basis in 2026. The Telecare acquisition also contributed to Integrated Care’s revenue growth in the second quarter, supporting Teladoc Health’s international expansion strategy. Additionally, partnerships with platforms such as Walmart are extending Teladoc Health’s reach beyond traditional employer and health-plan channels, giving consumers easier access to virtual urgent care, dermatology and nutrition services.
A major part of Teladoc Health’s next phase is Teladoc One, a more unified care model that combines multidisciplinary care teams, connected health data and always-on AI support. The platform is designed to coordinate care across chronic conditions, mental health, primary care and other needs rather than treating each condition separately. Programs are scheduled to begin with select clients in September 2026, followed by broader availability in January 2027.
Meanwhile, BetterHelp is undergoing a strategic shift toward insurance-based, in-network services, which could create a more durable growth model over time. The company has contracted for more than 150 million in-network lives and credentialed more than 8,000 mental-health professionals. TDOC is also investing in provider recruitment, network capacity, platform efficiency and targeted marketing to support further growth in its insurance-based business.
Risks for TDOC Stock
There are some factors, however, that investors should keep a careful eye on.
BetterHelp remains a key concern for Teladoc Health as weakness in the cash-pay mental health business continues to weigh on results. BetterHelp revenues declined 11.6% year over year to $212.6 million in the second quarter of 2026, while its adjusted EBITDA margin fell to just 0.2%.
Teladoc Health faces intense competition in the virtual care market, which could pressure pricing and growth. The company also remains unprofitable, reporting an accumulated deficit of $16.5 billion as of June 30, 2026, largely due to substantial investments in growth initiatives and technology.
Stocks to Consider
Some better-ranked stocks in the Medical space are BrightSpring Health Services, Inc. BTSG, Globus Medical, Inc. GMED and Centene Corporation CNC, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BrightSpring Health Services’ current-year earnings of $1.82 per share has witnessed two upward revisions in the past 30 days against no movement in the opposite direction. BTSG beat earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 16.1%. The consensus estimate for current-year revenues is pegged at $15.3 billion, suggesting 18.2% year-over-year growth.
The Zacks Consensus Estimate for Globus Medical’s current-year earnings of $4.99 per share has witnessed one upward revision in the past seven days, against no movement in the opposite direction. GMED beat earnings estimates in each of the trailing four quarters, with the average surprise being 27.9%. The consensus estimate for current-year revenues is pegged at $3.2 billion, suggesting 8.8% year-over-year growth.
The Zacks Consensus Estimate for Centene’s current-year earnings of $4.89 per share has witnessed two upward revisions in the past 30 days, against no movement in the opposite direction. CNC beat earnings estimates in each of the trailing four quarters, with an average surprise of 151.3%. The consensus estimate for current-year revenues is pegged at $196.3 billion, suggesting 0.8% year-over-year growth.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).

Here's Why Investors Should Stay Neutral on TDOC Stock for Now

Centene Corporation CNC shares have jumped 117% over the past year, far ahead of the industry’s 22.3% growth. The S&P 500 has gained 20.6% over the same period, while peers UnitedHealth Group Incorporated UNH and Elevance Health, Inc. ELV have returned 28.8% and 25.4%, respectively.
Much of Centene’s rally reflects a recovery from a depressed level. The stock came under heavy pressure after the company withdrew its 2025 earnings guidance in July 2025. Management found that Marketplace members were considerably sicker than expected, which reduced projected risk-adjustment revenues and hurt earnings expectations. Rising medical costs in both Marketplace and Medicaid plans added to the concern and weakened confidence in the company’s outlook.
The picture has improved since then. Profitability stabilized faster than investors expected, corrective pricing in the Marketplace business began to take hold, and Centene reduced exposure to plans that were not priced adequately. Management also raised its outlook several times. As a result, investors have moved from fearing prolonged losses and uncontrolled medical costs to expecting better margins, firmer pricing and more predictable earnings.
One-Year Price Performance: CNC, UNH, ELV, Industry & S&P 500
Operating Trends Point to a Recovery
Centene’s second-quarter health benefits ratio (HBR) improved 340 basis points year over year to 89.6%. Premium revenues increased 4.4% to $43.6 billion, supported by higher premium yields, growth in the prescription drug plan business and rate increases across Medicaid and Marketplace products.
The balance sheet also strengthened. Long-term debt fell 7.6% from year-end 2025 to $16 billion, while cash and cash equivalents rose 35% to $24.2 billion. Net cash provided by operations reached $8 billion in the first half of 2026, up 142.4% from the prior-year period, although favorable timing contributed to the increase.
Management raised its 2026 premium and service revenue guidance to $173-$177 billion from $171-$175 billion. The company now expects a HBR of 90.5-91.3% for 2026, compared with 91.9% in 2025 and 88.3% in 2024. The projected improvement suggests that recent pricing and cost actions are starting to support underwriting results.
Earnings Expectations Have Turned Sharply Higher
The Zacks Consensus Estimate calls for 2026 earnings of $4.89 per share, up 135.1% from the previous year. Analysts expect earnings to rise another 9.2% in 2027 to $5.34 per share.
Revenue growth is expected to remain modest. The consensus estimate points to revenues of $196.29 billion in 2026, up 0.8%, followed by a slight decline to $192.58 billion in 2027. This outlook shows that the recovery is centered more on margins and execution than on rapid sales growth.
Centene has also topped earnings estimates in each of the past four quarters, producing an average surprise of 151.3%.
Centene Corporation Price, Consensus and EPS Surprise
CNC’s Valuation
The rebound has lifted Centene’s valuation. CNC now trades at 12.56X forward earnings, above its five-year median of 11.31X. Even so, the multiple remains below the industry average of 15.69X. It also trails UnitedHealth’s 18.31X and Elevance Health’s 14.11X. Centene carries a Value Score of A, indicating that the stock still offers a reasonable mix of valuation and earnings potential.
Centene currently trades below the average analyst price target of $71.94, suggesting an upside of 11.8%. The range is wide, with the high target at $85 and the low at $56, reflecting different risk views.
Risks Have Eased, but They Have Not Disappeared
Centene remains dependent on government-sponsored healthcare programs. Its results can therefore shift with changes in federal and state funding, reimbursement rates and regulation across Medicaid, Medicare and Affordable Care Act Marketplace plans.
Expenses deserve attention. Total operating costs rose 5.5% in 2023, 5.8% in 2024 and 26.6% in 2025. They increased another 6.6% year over year in the first half of 2026. Pricing actions and tighter cost controls should help, but elevated medical expenses and continued investment could slow the pace of margin gains.
Capital efficiency remains another weak spot. Centene’s trailing 12-month return on capital is 6.8%, below the industry average of 9.9%, showing room for better capital efficiency.
Why Centene’s Recovery Could Continue
Several trends support the longer-term outlook. An aging population and rising chronic-disease prevalence should support long-term demand across Centene’s health plans.
Centene is also reshaping its membership mix. Total membership declined to 25.9 million at the end of the second quarter as the company reshaped its book, but prescription drug plan membership rose 12.2% year over year, while Individual and Commercial Group membership rose 10.5%, showing growth in selected areas of the portfolio.
The company is strengthening fraud prevention and payment integrity through AI-based analytics that can flag unusual claims earlier and improve oversight. It is also using advanced analytics in medical-cost forecasting, pricing and operating decisions.
Centene is working with states to secure rates that better match member needs, utilization trends and the risk profile of the population after eligibility redeterminations. These steps, together with firmer Marketplace pricing and tighter cost control, give the company a clearer path to steadier margins.
Should Investors Buy CNC Stock Now?
Centene’s sharp rebound increasingly has fundamental support rather than relying on momentum alone. Corrective Marketplace pricing, better Medicaid rate alignment, tighter cost controls and stronger PDP growth are helping margins recover, while repeated guidance increases point to better earnings visibility.
Risks tied to medical costs, regulation and government funding remain, and the stock is no longer as cheap as it was a year ago. Still, earnings estimates are moving higher, underwriting trends are improving, and valuation remains below key peers. With these factors supporting further upside, Centene currently sports a Zacks Rank #1 (Strong Buy), making the stock worth considering for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).

Centene Stock Roars Back 117% in a Year: Is CNC Still a Buy?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company to watch right now is Centene (CNC). CNC is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 12.35, which compares to its industry's average of 15.68. Over the past 52 weeks, CNC's Forward P/E has been as high as 13.40 and as low as 4.41, with a median of 8.43.
We also note that CNC holds a PEG ratio of 0.82. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CNC's PEG compares to its industry's average PEG of 0.87. CNC's PEG has been as high as 0.98 and as low as 0.38, with a median of 0.77, all within the past year.
Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. CNC has a P/S ratio of 0.16. This compares to its industry's average P/S of 0.3.
Value investors will likely look at more than just these metrics, but the above data helps show that Centene is likely undervalued currently. And when considering the strength of its earnings outlook, CNC sticks out as one of the market's strongest value stocks.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners Up
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
This article originally published on Zacks Investment Research (zacks.com).

Is Centene (CNC) a Great Value Stock Right Now?

The S&P 500 Index ($SPX) (SPY) closed down by -0.71% on Tuesday, the Dow Jones Industrial Average ($DOWI) (DIA) closed down by -0.79%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down by -1.29%. E-mini S&P futures (ESU26) fell -0.71%, and September E-mini Nasdaq futures (NQU26) fell -1.25%.
Stock indices retreated on Tuesday, with the S&P 500 falling to a 4-week low, the Dow Jones Industrials sliding to a 1-month low, and the Nasdaq 100 posting a 1-week low. Stocks fell as surging oil prices boosted inflation expectations and bond yields and ramped up expectations that global central banks will keep raising interest rates. Investors are demanding higher yields to hold bonds as concerns intensify over persistent inflation, government spending, and surging corporate borrowing to finance the AI buildout. The higher bond yields sparked a retreat in chipmakers and AI-infrastructure stocks on Tuesday.
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Tuesday’s global bond sell-off pushed bond yields to multi-year highs and undercut stocks. The UK 10-year Gilt yield soared to an 18-year high of 5.25%, the German 10-year Bund yield jumped to a 15-year high of 3.36%, the Japanese 10-year JGB bond yield surged to a 30-year high of 3.00%, and the 10-year T-note yield rose to a 1.75-year high of 4.80%.
Stocks maintained their losses on Tuesday amid weaker-than-expected US economic news, including Aug ISM manufacturing, July construction spending, and July JOLTS job openings.
The US Aug ISM manufacturing index fell -1.0 to 54.6, weaker than expectations of 55.2. The Aug ISM prices paid sub-index was unchanged at 71.1, stronger than expectations of a decline to 70.8.
US July construction spending fell by -0.5% m/m, weaker than expectations of no change.
The US July JOLTS job openings unexpectedly rose +89,000 to 7.271 million from a downward-revised 7.182 million in June, weaker than expectations of 7.313 million.
Hawkish comments on Tuesday from Fed Governor Michael Barr were bearish for stocks and bonds when he said, "If inflation appears not to be moderating sufficiently, then I think we should act decisively to raise interest rates."
Oct WTI crude oil prices (CLV26) surged more than +5% on Tuesday to a 6-week high as Middle East hostilities escalated. Late Monday, two oil supertankers were struck by projectiles while attempting to exit the Strait of Hormuz. Also on Monday, the US struck Iranian rocket launchers preparing to send mines into the Strait of Hormuz, and Iran retaliated by firing missiles and drones at US air bases in Jordan, while the United Arab Emirates said it intercepted drones from Iran.
Crude prices raced to their highs Tuesday afternoon when the US launched a fresh wave of strikes against targets in Iran in retaliation for Iran trying to put mines in the Strait of Hormuz and for earlier strikes on a US military base in Jordan. Iran said it retaliated with a “decisive operation” against US bases in the Middle East.
Q2 earnings results are a bullish factor for stocks. The S&P 500 is tracking for earnings growth of almost 32% in Q2, well above projections of +23%, and nearly four times the average earnings growth rate outside of the Covid period since Q4 of 2013, according to Bloomberg Intelligence. AI spending is expected to account for most of earnings, with AI infrastructure stocks set to contribute nearly 60% of the S&P 500's earnings-per-share growth in Q2. So far, earnings results have been positive, with 86% of the 487 S&P 500 companies that have reported Q2 earnings beating estimates, according to Bloomberg data.
The markets are discounting a 69% chance of a +25 bp rate hike at the next FOMC meeting on September 15-16.
Overseas stock markets settled lower on Tuesday. The Euro Stoxx 50 fell to a 1-month low and closed down -0.80%. China's Shanghai Composite fell from a 7-week high and closed down -0.16%. Japan's Nikkei-225 Stock Average closed down -0.15%.
Interest Rates
December 10-year T-notes (ZNZ6) closed down by -9 ticks on Tuesday. The 10-year T-note yield rose +4.2 bp to 4.792%. T-notes dropped to a 1.75-year nearest-futures low on Tuesday, and the 10-year T-note yield rose to a 1.75-year high of 4.798%. T-notes were under pressure from Tuesday’s +5% surge in WTI crude oil prices to a 6-week high, which boosted inflation expectations and is hawkish for Fed policy. The 10-year breakeven inflation rate rose to a 1.5-week high of 2.360% on Tuesday. T-notes are also being pressured by negative carryover from last Friday, when hawkish comments from Fed Chair Warsh pushed the chances of a Fed rate hike at next month’s FOMC meeting up to 69% on Tuesday from 36% before he spoke.
Losses in T-notes were limited on Tuesday amid weaker-than-expected US economic news on Aug ISM manufacturing, July construction spending, and July JOLTS job openings that sparked some short covering in T-notes.
European government bond yields moved higher on Tuesday. The 10-year German bund yield rose to a 15-year high of 3.364% and finished up +2.0 bp to 3.344%. The 10-year UK gilt yield surged to an 18-year high of 5.250% and finished up +15.7 bp to 5.220%.
The Eurozone Aug CPI rose +3.3% y/y, in line with expectations and the largest increase in nearly 3 years. Aug core CPI rose +2.4% y/y, weaker than expectations of +2.5% y/y.
The Eurozone July unemployment rate was unchanged at 6.4%, showing a slightly weaker labor market than expectations of 6.3%.
The Eurozone Aug S&P manufacturing PMI was revised downward by -0.1 to 52.7 from the previously reported 52.8.
German July retail sales unexpectedly fell by -3.4% m/m, weaker than expectations of +0.5% m/m and the biggest decline in 5 years.
ECB Governing Council member Martin Kocher said, "Upside risks to inflation have increased again recently. If this picture is confirmed in the ECB's new forecast, I believe another interest rate hike will be necessary in the near future."
The UK Aug S&P manufacturing PMI was revised upward by +0.2 to 51.7 from the previously reported 51.5.
Markets are discounting a 99% chance of a +25 bp ECB rate hike at its next policy meeting on September 10.
US Stock Movers
Chipmakers and AI-infrastructure stocks retreated on Tuesday amid the surge in bond yields. Lam Research (LRCX), Applied Materials (AMAT), KLA Corp (KLAC), ARM Holdings Plc (ARM), and Texas Instruments (TXN) closed down more than -3%. Also, Advanced Micro Devices (AMD), Microchip Technology (MCHP), ASML Holding NV (ASML), Micron Technology (MU), Analog Devices (ADI), and Qualcomm (QCOM) closed down more than -2%.
Cybersecurity stocks sold off on Tuesday, weighing on the broader market. CrowdStrike Holdings (CRWD) closed down more than -7%, and Cloudflare (NET) and SentinelOne (S) closed down more than -6%. Also, Palo Alto Networks (PANW), Fortinet (FTNT), and Zscaler (ZS) closed down more than -5%, and Okta (OKTA) closed down more than +4%.
Cryptocurrency stocks moved lower on Tuesday after Bitcoin (^BTCUSD) fell more than -2%. Circle Internet Group (CRCL), Strategy (MSTR), Riot Platforms (RIOT), and Coinbase Global (COIN) closed down more than -6%. Also, MARA Holdings (MARA) and Galaxy Digital Holdings (GLXY) closed down more than -4%.
Mining stocks fell on Tuesday as gold, silver, and copper prices slumped. Freeport-McMoRan (FCX) closed down more than -4%, and Hecla Mining (HL), Anglogold Ashanti (AU), Barrick Mining (B), and Southern Copper (SCCO) closed down more than -3%. Also, Coeur Mining (CDE) and Newmont Corp (NEM) closed down more than -2%.
Home builders and home supplies fell on Tuesday after the 10-year T-note yield rose to a 1.75-year high, raising mortgage rates and weighing on housing demand. Builders Firstsource (BLDR) closed down more than -5%, and DR Horton (DHI), Pulte Group (PHM), KB Home (KBH), Toll Brothers (TOL), and Home Depot (HD) closed down more than -2%. Also, Lennar (LEN) closed down more than -1%.
Defensive health insurance stocks moved higher on Tuesday, with the slump in the broader market. Humana (HUM) and CVS Health Corp (CVS) closed up more than +3%, and Elevance Health (ELV), Cardinal Health (CAH), the Cigna Group (CI), and Molina Healthcare (MOH) closed up more than +2%. Also, UnitedHealth Group (UNH) and Centene (CNC) closed up more than +1%.
Fervo Energy (FRVO) closed up more than +28% on a Wall Street Journal report that said the company has signed a deal to sell power to Alphabet’s Google.
Duolingo (DUOL) closed up more than +7% after Evercore ISI upgraded the stock to outperform from in line with a price target of $210.
Howmet Aerospace (HWM) closed up more than +4% after Citigroup said Monday’s selloff in the stock was “overblown,” and maintains its buy rating on the stock.
Earnings Reports (9/2/2026)
Broadcom Inc (AVGO), Brown-Forman Corp (BF/B), Five Below Inc (FIVE), Hewlett Packard Enterprise Co (HPE), NetApp Inc (NTAP), Ollie's Bargain Outlet Holding (OLLI), PVH Corp (PVH), Snowflake Inc (SNOW).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.