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Stock market hiccup: not so much about health-care decision

But some investors still grumbled that the Supreme Court's health-care decision might dampen business confidence and inhibit companies from hiring new workers.

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Despite all the hoopla on the talk and news shows about the ruling, some Wall Street observers didn’t think the ruling had much impact on the stock market, since the bulk of the selling seemed to come from technology, energy, and financial stocks.

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“Tell me how technology, energy, and financial stocks are affected by the health-care decision,” says Sam Stovall, chief equity strategist at Standard & Poor’s in New York. “The health-care stocks are declining less than the market.”

Instead, the stock market is wary of the continued financial turmoil in Europe, Mr. Stovall says. On Thursday and Friday, European nations are holding a summit. “The next hurdle for the market happens to be Europe,” says Stovall.

Nevertheless, most stock-market observers viewed the Supreme Court decision as a surprise.

“The conventional wisdom was that a conservative activist court would undo a liberal piece of legislation,” says Marty Leclerc, chief investment officer at Barrack Yard Advisors in Bryn Mawr, Pa.

However, Mr. Leclerc says, almost no matter what decision came down, the health-care industry was ready for it.

“Take a company like United Healthcare,” he says. “Two weeks ago, it announced that it would increase its dividend by 31 percent and buy back their stock.”

According to. Leclerc, the Congressional Budget Office estimates that as a result of the Affordable Care Act, the number of uninsured people going to hospitals will decline by 50 percent in four years. “That will be helpful,” he says.

Before the ruling came down, Jerry Harris, chief investment officer at Sterne Agee Asset Management in Birmingham, Ala., said he anticipated that the mandate for individuals to buy insurance would be struck down. If that happened, he said, the market would react positively since it would view the decision as politically unfavorable to Mr. Obama and favorable to the Republicans.

“Right now the market participants are looking for some good news politically,” he said.

But when it comes to politics, Wall Street is known to shift its allegiance often.

“The reality is that Wall Street supports whoever is ahead in the polls,” says Fred Dickson, chief investment strategist at D.A. Davidson & Co. in Lake Oswego, Ore.

In fact, even though many investors on Wall Street are unhappy with Obama, they have made money since he was elected. The Standard & Poor’s 500 index has an annualized return of 17.5 percent since January 2009, observes Mr. Harris.


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