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Saturday, May 15, 2021

US health stocks pull market higher

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NEW YORK – Investors moved back into stocks on hopes that a special election in Massachusetts will take away power from Senate Democrats and make it harder for President Barack Obama to make changes to health care.

The vote Tuesday to fill the seat of late Sen. Edward M. Kennedy could shift power in the Senate if Republican Scott Brown wins. That would give Republicans the 41 votes necessary to filibuster Democratic proposals, including the health care bill.

The prospect of a logjam in Washington over health care eased concerns that profits at companies like insurers and drug makers would suffer. Rising health stocks pulled the broader market higher.

Meanwhile, Kraft Foods Inc.’s agreement to acquire Cadbury PLC for $18.9 billion boosted hopes that corporate dealmaking will continue to rebound. Investors see buyouts as a sign of confidence in the economy.

Technology stocks got a boost after a Credit Suisse analyst raised his rating on Ciena Corp., a maker of telecommunications equipment, predicting that revenue would exceed expectations.

The gains came after stocks fell Friday when JPMorgan Chase & Co.’s quarterly results fell short of expectations. The Dow Jones industrial average lost 100 points, its steepest slide of 2010. U.S. markets were closed Monday for Martin Luther King Jr. Day.

Analysts said that beyond a possible shift in plans for health care, the week’s earnings reports will help chart the market’s course in the coming months as companies update their expectations for the economy.

“This is just a critical period when we get to see the litmus test of earnings and then guidance,” said Philip S. Dow, managing director of equity strategy at RBC Wealth Management in Minneapolis.

In late morning trading, the Dow rose 75.65, or 0.7 percent, to 10,685.30. The broader Standard & Poor’s 500 index rose 8.95, or 0.8 percent, to 1,144.98, and the Nasdaq composite index rose 23.70, or 1 percent, to 2,311.69.

Among health stocks, insurers Aetna Inc. rose $1.64, or 5.2 percent, to $33 and United Health Group Inc. rose $1.30, or 3.9 percent, to $35.05. Pharmaceutical company Pfizer Inc. rose 38 cents, or 1.9 percent, to $19.87.

Shares of Cadbury rose $2.75, or 5.3 percent, to $54.65. Kraft fell 77 cents, or 2.6 percent, to $28.81.

Ciena rose $1.11, or 9.5 percent, to $12.74.

Citigroup Inc. rose 2 cents to $3.44 after reporting a fourth-quarter loss of $7.6 billion. The bulk of the loss is due to expenses related to its repayment of $20 billion in government bailout money.

Earnings reports are due this week from Bank of America Corp., Wells Fargo & Co., Morgan Stanley and Goldman Sachs Group Inc.

Bond prices fell, pushing their yields slightly higher. The yield on the benchmark 10-year Treasury note rose to 3.71 percent from 3.68 percent late Friday.

The dollar mostly rose against other major currencies. Gold prices also rose.

© Copyright 2007, E.W. Scripps Co.. Displayed by permission. All rights reserved.

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