Topline
The Dow Jones Industrial Average and S&P 500 rose to new record highs Friday, as the Dow benefited from UnitedHealth Group’s stock pacing its largest single-day gain in nearly five years in the wake of Warren Buffett’s Berkshire Hathaway disclosing a stake in the beleaguered insurer.
The Dow added nearly 300 points shortly after market open Friday, sending the index to a new record high of 45,203, while the S&P 500 jumped to an intraday record of about 6,481 and the Nasdaq fell slightly (0.07%).
UnitedHealth shares jumped more than 9% as trading opened Friday, following similar success in premarket, pacing what would be the stock’s largest single-day gain since Nov. 4, 2020 (10.3%).
Berkshire Hathaway purchased more than 5 million shares in UnitedHealth in June, accounting for a stake worth about $1.6 billion at the time, according to a Securities and Exchange filing released Thursday, ranking UnitedHealth as the 18th-largest position in Berkshire’s portfolio behind Amazon and beverage giant Constellation Brands.
Scion Asset Management, the hedge fund run by Michael Burry, a prolific investor of “The Big Short” fame, also added a stake in UnitedHealth, filings show.
Other new investments for Buffett’s investment firm included homebuilders Lennar and DR Horton, outdoor advertising firm Lamar Advertising, Allegion and steel manufacturer Nucor.
Berkshire cut its position in Apple by about 7%, though the company remained one of the investment firm’s largest positions alongside American Express, Bank of America, Coca-Cola and Chevron.
Buffett held more than 1 million UnitedHealth shares between 2006 and 2009, though he dumped his entire stake in 2010 as investors dropped their shares in health insurers.
Federal data released Friday indicated retail sales rose 0.5% in July, matching forecasts among economists, according to a Dow Jones consensus. Sales excluding automobiles also met expectations after increasing 0.3%.
Broader market success has been backed by optimism the Federal Reserve will lower interest rates in September, after lighter-than-expected inflation data was reported earlier this week. Some of those hopes were hampered by worse wholesale inflation than projected, though there remains a 92.5% chance that interest rates—held between 4.25% and 4.5% since December—will be lowered by at least a quarter-point, according to CME’s FedWatch. The CBOE Volatility Index (VIX), tracking likely stock movements over the next month, recently fell to its lowest levels this year, as Wall Street’s barometer for market uncertainty forecast calmer stock shifts.