SOTS 2nd Hour: DOJ Targets UnitedHealth, Auditing the Fed? Plus: Visa, IMAX CEOs 02/21/25

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Market insight and analysis. You're listening to the opening bell of CNBC's Squawk on the Street.

Carl Quintanilla (1:11)

Good Friday morning, welcome to another hour of Squawk on the Street. I'm Carl Quintanilla, Morgan Brennan, Sierra Post 9 of the New York Stock Exchange, alongside David Faber, who's live at the FII Priority Summit down in Miami. Sarah Eisen has the morning off. Dow getting hurt by UNH, a story we'll get to in a moment. But aside from that, some questions about growth in the consumer after Walmart's guidance yesterday and today, just now, the first contraction in services PMI since January of 23

Morgan Brennan (1:38)

Being watched very closely. We're 30 minutes into the trading session. Here are three big movers that we are also watching closely. UnitedHealth under pressure. The general reporting that the DOJ has launched an investigation of the company's Medicare billing practices. We're going to have much more on this in the fallout in just a moment. And you can see shares are now down 9%.

Alibaba shares jumping again. After earnings yesterday, reports now that GameStop CEO Ryan Cohen has increased his personal stake in the Chinese tech giant to roughly 7 million shares. That's worth about a billion dollars. Alibaba sent the Hang Seng higher overnight too. And it's now up, get this, a whopping 60% since the start of the year. Also watch the travel names today. Booking holdings gaining on strong numbers. Room nights, gross bookings and revenue all up double digits year over year. Strong international travel demand was really the big driver there. You can see those shares are about 4.5%.

Carl Quintanilla (2:29)

Waiting on Michigan Consumer Sentiment a few moments ago. We'll get to that. Actually, 64.7 we have now is pretty much in line with actually a slight miss from 67.8 expectations. We're going to couple that with the services PMI number along with existing Diana Olick's got that. Hey, Diana.

Diana Olick (2:46)

Hey, Carl, that's right. Existing home sales in January fell 4.9% month to month to a seasonally adjusted annualized rate of 4.08 million units. That is a much steeper decline than the street was expecting. Sales still 2% higher than January of 2024 But that's not saying much given the levels right now. This read is based on closings.

So, contracts likely signed in November and December when mortgage rates actually came down from over 7% to the 6% range. Rates are now higher again. Inventory increased 3.5% for the month, up 17% from a year ago, but still at a very low level, just a 3.5 month supply at the current sales pace. That is keeping pressure on prices. The median price of a home sold in January was $396,900, up 4.8% year over year. That is the highest price ever for January, and all four regions saw price gains. All cash sales at 29%, which is kind of historically high, but down from 32% the year before. First time buyers still struggling at 28% of sales, same as a year ago, but historically, they usually make up 40% of buyers. Back to you guys.

Morgan Brennan (3:55)

All right, Diana Olick, thank you. Capping off, interesting week, we'll say, for housing data. To one of the big stock stories of the day, though, UnitedHealthcare shares sinking on the journal report that the DOJ is investigating the company over Medicare billing practices. Other health insurers are also getting hit. You can see on your screen right there, down in sympathy. Bertha Coombs is here with what investors should know. Bertha.

Bertha Coombs (4:19)

Morgan, the Justice Department is reportedly pursuing a civil fraud case against UnitedHealth for over billing in Medicare Advantage. That, according to the Wall Street Journal, citing unnamed sources. Now, the issue surrounds what's known as risk adjustment payments in Medicare Advantage plans. Sicker payments with multiple patients with multiple conditions incur higher risk adjustment reimbursement payments to plans. The idea being that you're getting paid to keep patients healthier. But an HHS Inspector General Report last year found that higher risk diagnoses that weren't supported by actual care resulted in $7.5 billion in overpayments in 2023 to the top 20 Medicare Advantage plans. And that was the second report in five years, both reports recommending better oversight over this program. Now, Scott Fidel of Stevens notes that overpayments have been a perennial source of contention between insurers and regulators, and the Biden administration clawed back overall rates to account for that. While RBC's Ben Hendricks says he's skeptical of today's stock move on unnamed sources. Now, United Health hitting back in a statement against the journal saying, the Wall Street Journal continues to report misinformation on the Medicare Advantage program, adding that the government regularly reviews all MA plans to ensure compliance and say that they consistently perform at the industry's highest levels. And they said, adding, we are not aware of the, quote, launch of any new activity as reported by the journal. They said, we are aware, however, that the journal has engaged in a year long campaign to defend a legacy system that rewards volume over keeping patients healthy and addressing their underlying conditions. And any suggestions that our practices are fraudulent is an out, is outrageous and according to the company. So they have been striking back at the journal that has posted a number of stories about this over the past year. Back over to you.