US STOCKS rose yesterday, with the Nasdaq hitting a 15-month high after a healthcare reform bill advanced in the Senate and brokerages upgraded two Dow components on improving profit prospects.
Healthcare stocks rose after a bill to overhaul the US healthcare system, which is perceived as less damaging to industry profits than expected, passed a crucial test in the US Senate early in the day.
Retail stocks also gained as investors were optimistic about the rest of the holiday shopping season even after a heavy snowstorm hit the East Coast over the weekend, which may have deprived retailers of profits.
Legislation to overhaul the US healthcare system passed a crucial test early on as backers cleared a procedural hurdle to approving the bill, which is President Barack Obama’s top legislative priority.
Following the vote, the Morgan Stanley Health Payor index climbed three per cent. Health insurers Aetna added 4.7 per cent to $34.04 and Cigna rose 3.9 per cent to $37.19.
“When it comes to healthcare, as it is with any industry, it’s more about certainty,” said Marc Pado, US market strategist at Cantor Fitzgerald in San Francisco. “That way you know who the winners and losers are.”
The Dow Jones industrial average shot up 85.25 points, or 0.83 per cent, to end at 10,414.14. The Standard & Poor's 500 Index gained 11.58 points, or 1.05 per cent, to 1,114.05. The Nasdaq Composite Index rose 25.97 points, or 1.17 per cent, to end at 2,237.66.
Window dressing -- where portfolio managers sell lagging stocks and buy shares that have rallied recently -- also buoyed the broad market. Investors snapped up winners after a rally that has driven the S&P 500 up 23.3 per cent for the year.
The S&P 500 closed within a hair of a new 14-month high, while the Nasdaq ended at a 15-month high. In contrast, the Dow ended considerably below its 2009 closing high at 10,501.05, which it reached on 14 December.
Intel gained 2.3 per cent to $20.09 on Nasdaq after Barclays upgraded the stock to “overweight” from “equal weight”, citing solid “end-market” conditions.