stocks rose yesterday as stronger-than-expected economic data helped lift energy stocks, overshadowing concerns a European Union summit will not yield tangible progress in easing the debt crisis.
The energy sector showed the strongest gains among the 10 major S&P 500 groups, rising 1.9 per cent as oil prices settled higher at $80.21 a barrel. Cabot Oil & Gas jumped nine per cent to $41.24 and was the biggest advancer on the S&P 500.
Worries about Europe have fed dramatic selloffs in stocks lately, but the declines have been tempered by enough short-term buying to keep the market confined to a range.
Sentiment was helped by better-than-expected sales of long-lasting American manufactured goods in May, although excluding transportation and defense items, orders were down.
In other data, signed contracts for home purchases jumped to a seven-month high. The PHLX housing sector index climbed three per cent, taking the year-to-date gains near 26 per cent. Shares of Lennar, the third-largest US homebuilder, rose 4.8 per cent to $28.70 after it reported a rise in new orders for the fifth straight quarter.
Arena Pharmaceuticals surged 28.7 per cent to $11.39 on news that US health regulators approved the drugmaker’s pill to treat obesity, the first weight-loss drug in 13 years.
But uncertainty remained ahead of the Eurozone leaders’ summit, which begins today. Few anticipate anything concrete to emerge from the two-day meeting after German Chancellor Angela Merkel said on Tuesday that debt sharing, an idea backed by France, Italy and Spain, would not happen in her lifetime.
Healthcare stocks were in focus heading into today’s US Supreme Court decision on President Barack Obama’s 2010 healthcare law.
Some investors have their attention on stocks less likely to be affected by the ruling, such as large pharmaceuticals. Many investors expect the requirement that uninsured Americans purchase health insurance to be overturned, “so people have had plenty of time to position their portfolios for that,” said Foreman.
The Dow Jones industrial average gained 93.32 points, or 0.74 per cent, to 12,627.99. The Standard & Poor’s 500 Index advanced 11.89 points, or 0.90 per cent, to 1,331.88. The Nasdaq Composite Index added 21.26 points, or 0.74 per cent, to 2,875.32.
The market’s rise came on light volume of 5.75bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq. The daily average year-to-date is 6.84bn.
Shares of Vivus and Orexigen Therapeutics jumped following the FDA approval of Arena’s obesity drug. Vivus shares were up 7.4 per cent to $28.33 and Orexigen Therapeutics rose 20.3 percent to $4.92