If investors expect President Obama's health care reform law to freeze the U.S. economy, they're not showing it on Wall Street.
In the first five trading days since the Supreme Court's June 28 ruling upholding the law's constitutionality, about $470 billion was added to U.S. equity values. The Standard & Poor's 500 index posted its biggest three-day rally of the year and rose 2.7 percent, with gains in 43 of its 52 health care companies.
Equities rose even as opponents warned that the program will stifle free enterprise. While health insurance companies dropped 7 percent in the first five trading days since the ruling, gains in everything else showed that investors were focused on earnings growth, employment and efforts by Europe to contain the debt crisis, said David Kelly, chief market strategist at JPMorgan Funds.
"People have very strong political opinions and very weak analytical and investment opinions related to health care," Kelly said. "The European summit ... was far more important for global financial markets than the president's health care act."
The S&P 500's five-day rally after the ruling brought its increase for 2012 to 8.8 percent (before Friday's 0.9 percent drop, which was blamed on a poor U.S. employment report) and handed investors in U.S. stocks the only gains over the last 12 months among the world's 17 biggest markets. The S&P 500 climbed 2.2 percent since July 2011, compared with a 9 percent drop in Japan's Nikkei 225 stock average.
Health care stocks in the S&P 500 have advanced 17 percent since the day before Congress passed the law in 2010. That compares with an 18 percent increase for all companies in the full index and a 30 percent rally for a group of health insurers in the gauge.
While politicians debate the law's future, investors are more interested in the effect Europe's debt crisis will have on U.S. corporate earnings, said E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia.
"When you compare it to the debt crisis in Europe, when you compare it to worries about the labor market in U.S., when you compare it to the slowdown in the emerging economy, health care is just not as important to the market and you're seeing that," said Greg Woodard, a strategist at Manning & Napier in New York. "That just took a backseat."