Stocks of hospital operators and other providers of health care rallied Thursday after the U.S. Supreme Court voted 6-3 in upholding tax subsidies that are central to President Barack Obama's Affordable Care Act.
HCA Holdings (HCA) and Tenet Healthcare (THC) both jumped nearly 9 percent in the moments after the high court ruling. By the close of the session, shares of HCA were up about 9 percent and Tenet Healthcare were up 12 percent.
"The area that had the most to gain or lose were the hospitals, had the court ruled against Obamacare, they would have had the most downside," said Jim Russell, portfolio manager at Bahl & Gaynor.
The ruling preserves the 2010 law that provides for tax credits in all 50 states, not only the 16 that had approved their own online insurance exchanges, with Chief Justice John Roberts writing: "Congress passed the Affordable Care Act to improve health markets, not destroy them."
"In trying to live by the Hippocratic Oath the justices made the right move today, and that is being reflected in the health care care stocks, especially in the insurance companies," Art Hogan, chief market strategist at Wunderlich Securities said, referring to the vow historically taken by physicians.
While the ruling was expected, most analysts thought the vote would be closer, or 5-4. "The statement that (the ruling) makes is, let's say there's another administration that wants to take another crack at this, this makes it a less likely scenario," Hogan added.
Other shares surging on the news included Community Health Systems (CYH), which finished up 13 percent and Universal Health Services (UHS) climbing 8 percent. Humana (HUM) rose 7 percent and Aetna (AET) gained 4 percent.
A Bloomberg report that Aetna was close to a deal to acquire Humana also bolstered shares of the latter, which the news agency said had also received an offer from Cigna (CI), but preferred Aetna.
Thursday's ruling "does remove uncertainty for the markets, so to that extent it is positive for the (health care) sector and for the markets, although modestly so," said Russell, who expects the stock market's focus to return to the ongoing saga involving Greece and second-quarter earnings.