Health Care Sector Roils After ACA Court Ruling

The health care sector is getting punished before the opening bell after a federal judge in Texas ruled Friday that the Affordable Care Act is unconstitutional and more in Monday’s Markets In Brief.

Hospital chains HCA Inc. and Tenet Healthcare Corp. all dropped more than 5 percent before markets opened Monday, as did Centene Corp., a health insurer focused heavily on the government-funded Medicaid program and the ACA’s individual insurance exchanges.

Other insurers that slipped included Molina Healthcare Inc. and Anthem Inc., companies that have benefited from either the insurance exchanges or the law’s Medicaid expansion.

With uncertainly roiling sector shares, some sensed an opportunity and stepped in. Leerink analyst Ana Gupte expects the judge’s contentious decision will be overturned either by the Fifth Circuit Court of Appeals next year or the Supreme Court in 2020.

MARKETS IN BRIEF

Google Commences $1B Expansion in New York City

Google is spending more than $1 billion to expand operations in New York City.

Ruth Porat, senior vice president and chief financial officer at Google and Alphabet, said in a blog post Monday that Google is creating a more than 1.7 million square-foot campus that includes lease agreements along the Hudson River in lower Manhattan. Google Hudson Square will be the company’s primary location for its New York operations.

Google put its first office in New York nearly 20 years ago, and already has more than 7,000 employees in the city. The company has continued to build up its New York presence, announcing earlier this year that it was buying the Manhattan Chelsea Market building for $2.4 billion and planned to lease more space at Pier 57.

Google hopes to move into the new campus by 2020.

Google’s plan to expand is being announced a month after Amazon said it would put one of its second headquarter locations in New York’s Long Island City neighborhood.

Boeing Buying Stake in Embraer Operations for $4.2B

Boeing is buying a majority stake in Embraer’s commercial aircraft and services operations for $4.2 billion.

The joint venture, announced Monday, gives Boeing 80 percent ownership of those operations, with Embraer owning the remaining stake.

Boeing will have operational and management control of the company. Embraer will keep consent rights for some decisions, such as the transfer of operations from Brazil.

The deal still needs approval from the Brazilian government, as well as shareholders and regulators.

The companies also agreed to another joint venture to promote and develop new markets for the multi-mission medium airlift KC-390. Embraer will own a 51 percent stake in the joint venture, with Boeing owning the remaining 49 percent. The transaction is targeted to close by the end of next year.

Mexico Aims to Boost Crude Output by 45% Before 2025

Mexican President Andres Manuel Lopez Obrador detailed plans Saturday to “rescue” the national oil industry by boosting crude production at the state-owned oil company by 45 percent before 2025.

Speaking from Ciudad del Carmen, a Gulf coast city 50 miles (85 kilometers) from an oil field that sustained Mexican public finances for decades, Lopez Obrador said the goal is for Petroleos Mexicanos to raise crude output to 2.4 million barrels per day, from the current 1.65 million barrels per day.

“We are going to invest where we know there’s petroleum and where it costs us less to extract it,” he told a jubilant crowd of oil workers.

Lopez Obrador previously announced plans to invest 75 billion pesos ($3.65 billion) of savings from a government austerity program into Pemex.

The company has struggled to come up with funds in recent years amid mounting pension obligations, high tax rates, rampant fuel theft and inefficiencies.

The president shared an anecdote about once chatting with a man on a plane to Ciudad del Carmen who was delivering a $1 million watch to a customer in the city, suggesting that the watch was a symbol of corruption and theft in the oil industry. “This is why the country is sinking,” he said, vowing to root out pilfering of the state entity.

Lopez Obrador described his plan to “rescue” the oil industry as “realistic” and reiterated a pledge to move Pemex’s headquarters from the capital to Ciudad del Carmen.

Ex-Bank President Gets 6 Years Prison for Fraud, Conspiracy

The former president of the only financial institution criminally charged in connection with the federal bank bailout program has been sentenced to six years in prison for fraud and conspiracy.

Former Wilmington Trust president Robert Harra Jr. was sentenced Monday. He and three other bank officials were convicted in May of concealing the bank’s troubled condition from regulators and shareholders following the 2008 financial crisis.

Prosecutors were seeking a sentence of eight years, while Harra’s attorney asked for probation, citing his long history of community service.

The defendants were convicted of misleading regulators and investors about Wilmington Trust’s massive amount of past-due commercial real estate loans before the bank was hastily sold in 2011. The century-old bank imploded despite receiving $330 million from the federal Troubled Asset Relief Program.