NEW YORK (AP) — Shares of hospital operators advanced Wednesday morning after voters re-elected President Barack Obama, helping preserve the 2010 health care reform law and its expansion of health insurance coverage.
The gains came as the broader market fell sharply on predictions that a broad recession in Europe is all but certain.
Obama was elected to a second four-year term Tuesday, and the Democratic Party appeared to make small gains in the Senate and the House of Representatives. Republicans had campaigned hard on a promise to repeal and replace the "Obamacare" health care reform law, saying it would reduce choices for consumers and criticizing its requirement that most people buy health insurance.
The law is expected to extend health insurance to about 30 million people who had none when it was passed. It is seen as good news for hospitals because they will see more patients and more of those patients' bills will be covered by insurance.
Citi Investment Research analyst Gary Taylor said the results ensure that the health care law will stand, and said he expects hospital stocks to rise about 15 percent in the short term. However he said the stocks will remain volatile.
"Despite this very good news, some investors will be selling the election news, others will remain on the sidelines until details of deficit reduction cuts begin percolating through the market," Taylor said.
Shares of HCA Holdings Inc., the largest U.S. hospital chain, gained $1.86, or 6 percent, to $32.79. Other companies making large gains included Health Management Associates Inc., which has 70 hospitals, most of them in the South and Southeast, and Vanguard Health Systems Inc., which has 28 hospitals in metropolitan Chicago, Boston, Detroit, Phoenix, San Antonio, and other areas.
Health Management shares jumped 61 cents, or 7.9 percent, to $8.33. Vanguard Health Systems Inc. rose 77 cents, or 7.3 percent, to $11.34.
Tenet Healthcare Corp. shares rose $1.66, or 6.6 percent, to $26.60. Tenet reported its third-quarter results on Wednesday, and was one of the last companies in the sector to do so. The Dallas company posted net income of 37 cents per share, which was more than analysts had expected.
Elsewhere in the sector, shares of Universal Health Systems Inc. added $1.89, or 3.2 percent, to $45.60, Community Health Systems Inc. stock picked up $1.47, or 5.1 percent, to $30.15, and shares of LifePoint Hospitals Inc. gained 28 cents $37.35, while.