US stocks rose broadly yesterday, lifting the Dow and the S&P 500 to fresh 15-month closing highs as investors bet a potential Republican victory in Massachusetts’ Senate race could stall Obama’s reform agenda.
Wall Street also got a boost from technology shares, which rallied in anticipation of strong earnings from bellwether International Business Machines, which rose 1.8 per cent to $134.14, making it the Dow’s top boost.
Indeed, after the bell, IBM delivered quarterly earnings that beat Wall Street’s forecasts.
But healthcare shares rallied the most in the regular session on hopes that policy gridlock in Washington would slow the healthcare overhaul, removing a threat to the profits of insurers and drug companies.
The S&P Healthcare Index climbed 2 per cent, with drug company Eli Lilly, up 4.4 per cent at $37.41, among the standouts. Health insurers’ shares also rallied briskly, with Humana up 7.1 per cent at $51.94.
Massachusetts voters were deciding a tight race yesterday to replace the late Edward Kennedy, a Democrat. The loss of one seat in the US Senate could hurt the Democrats’ ability to proceed to a vote on the planned healthcare overhaul that seemed to be in the final stages.
“A Republican win would be a positive for the markets since it would mean increased potential for gridlock in Washington,” said Carmine Grigoli, chief US strategist at Mizuho Securities USA in New York. “This is probably especially true now, given the very large social agenda of the Obama administration.”
The Dow Jones industrial average jumped 115.78 points, or 1.09 per cent, to end at 10,725.43. The Standard & Poor’s 500 Index shot up 14.20 points, or 1.25 per cent, to 1,150.23. The Nasdaq Composite Index climbed 32.41 points, or 1.42 per cent, to 2,320.40.
The reform bills under debate in Congress would reshape the healthcare insurance market through new regulations, taxes and other changes. The healthcare overhaul is President Barack Obama’s top domestic priority, and the White House said that Obama does not believe healthcare reform is dead even should the Democrat, Martha Coakley, lose.
Health insurer Aetna gained 4.2 per cent to $32.66. Drugmaker Merck & Co, a Dow component, gained 3 percent to $40.62. The Dow also received a boost from McDonald’s after Credit Suisse upgraded the fast food giant, saying its international businesses were a potential driver of earnings.