American Airlines Sinks After Reduced Forecasts

Major equities indexes lost ground as Treasury yields moved higher and stocks came under pressure amid the increasing likelihood of interest rates staying higher for longer.

The S&P 500 slipped 0.7% on Tuesday. The Nasdaq fell 0.6%, retreating from the all-time high and the 17,000-point milestone it achieved in the previous session. The Dow plunged more than 400 points, losing 1.1%.

American Airlines (AAL) shares plummeted 13.5%, marking the steepest drop of any S&P 500 stock, after the carrier cut its sales and profit forecasts for the current quarter. The airline also announced that Chief Commercial Officer Vasu Raja will be leaving the company next month. Raja was involved in American’s push toward selling tickets directly rather than via third-party platforms, which some analysts say has cost the airline market share. The news may have boosted shares of rival United Airlines (UAL), which gained 2.4%.

Energy was the weakest-performing sector as crude oil prices receded from recent highs. Shares of petrochemical refiner Valero Energy (VLO) dropped 4.8%. Constellation Energy (CEG) shares lost 4.4%, giving back some of the recent gains posted by the stock amid optimism about the firm’s opportunity to supply nuclear-generated power for artificial intelligence (AI) data centers.

A company executive from UnitedHealth Group (UNH) described a potential “disturbance” to the firm’s Medicare business as states limit the number of residents who qualify for the program, and stocks across the health insurance industry came under pressure. UnitedHealth shares sank 3.8%, while Molina Healthcare (MOH) shares were down 2.8%.

Marathon Oil (MRO) shares jumped 8.4%, notching Wednesday’s top performance in the S&P 500, after energy giant ConocoPhillips (COP) agreed to buy the independent exploration and production company in an all-stock deal worth $22.5 billion including debt. The acquisition will boost ConocoPhillips’ footprint in shale fields across Texas, New Mexico, and North Dakota. The acquisition price equates to nearly a 15% premium to Marathon shares’ closing price on Tuesday.

Despite the Medicare-related concerns rippling across the health insurance industry, several hospital operators got a boost from a Zacks Research report highlighting a few key tailwinds. Positive trends include higher patient volumes and technological advancements, from telehealth to AI-assisted diagnostics. Shares of Universal Health Services (UHS) were up 2.9%, while HCA Holdings (HCA) shares added 2.0%.

Uber Technologies (UBER) shares gained 2.2% following upbeat commentary from RBC Capital. Analysts reaffirmed their positive view on the ride-sharing stock after meetings with members of Uber’s management team covering a range of issues, from market competition to the risks and opportunities associated with automated vehicles.