Little Relief for UnitedHealth

Investors at first cheered the managed care provider's plans to cut costs on July 2, but the shares wound up closing lower amid increasing concerns about its margins

That sound you heard on Wall Street on July 2 was a tentative sigh of relief upon UnitedHealth Group's (UNH) announcement that it was cutting its 2008 profit outlook by 16%—a move widely expected by investors—and slashing 4,000 jobs as part of a cost-cutting effort. The moves lifted shares of both UnitedHealth and the broader managed health-care group. Only later in the day did the challenges the industry faces in the next year or two come back into focus, causing the stocks to come off their earlier highs.

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