(Bloomberg) -- U.S. health insurers rose the most in five months after two Democratic presidential hopefuls wthdrew from the race and said they would endorse Joe Biden, pressuring Bernie Sanders’s Medicare for All plan.
The seven-member index of S&P managed care companies extended gains around midday Monday, after Senator Amy Klobuchar (D-Minn.) ended her bid for the presidency and said she plans to endorse the former vice president for the party’s nomination. The stocks continued to climb as the Associated Press reported fellow rival Pete Buttigieg would also support Biden after halting his own campaign over the weekend.
Humana Inc., UnitedHealth Group Inc., Anthem Inc. and Centene Corp. advanced at least 4.6% each, spurring the index to its best day since October 15. The reaction comes as investors leaned into bets that the pair’s backers will side with Biden, and not Senator Sanders.
Wall Street has warned that Sanders’s political ascendancy could impact the health sector, and most notably those in the managed care space. His push for a single payer health system, known as Medicare for All, would make health insurers among those most vulnerable to a Sanders presidency.
The index has lost 7.8% so far in 2020, despite Monday’s 6.6% rally, as investors weigh challengers to President Donald Trump in November. Monday’s climb marked the group’s best single-day advance in five months, when UnitedHealth, the industry’s biggest company, reported quarterly results that topped expectations. The year-to-date drop stands in contrast to the S&P 500 Index’s roughly 4.4% decline this year.
The news comes less than 24 hours ahead of Super Tuesday, a day where Democrats in 14 states vote in the single biggest day of balloting.
(Updates to include details about Pete Buttigieg and share movement throughout)
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