Health stocks pull US market higher
NEW YORK, United States – Investors moved back into stocks on hopes that an election in Massachusetts will weaken Senate Democrats and make it harder for President Barack Obama to make changes to health care.
The vote yesterday 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 block 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.
The Dow Jones industrial average rose 116 points to a 15-month high after sliding 101 on Friday. Broader indexes also rose and demand for the safety of government debt waned.
Meanwhile, Kraft Foods Inc’s agreement to acquire Cadbury PLC for US$19.5 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. US 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.
The stock market has been climbing for 10 months on hopes that an easing recession would boost corporate profits. But lingering problems like high unemployment and a weak housing market have raised questions about whether the jump in stocks is premature.
The Dow rose 115.78, or 1.1 percent, to 10,725.43. The broader Standard & Poor’s 500 index rose 14.20, or 1.3 percent, to 1,150.23. It was the highest close for the Dow and the S&P 500 index since Oct. 1, 2008.
The Nasdaq composite index rose 32.41, or 1.4 percent, to 2,320.40.
