Market Wrap: S&P Hits 3-Week High as Health Stocks Rally

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Dow Jones Industrial Average Rises Sharply
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By Noel Randewich

NEW YORK -- U.S. stocks ended stronger after a volatile session Wednesday, led by a rebound in biotechnology companies that pushed the S&P 500 to its highest level in three weeks.

Materials shares also rose, helped by rising gold and silver prices.

Investors' focus is turning to earnings, and Yum Brands was the S&P's biggest loser after reporting weak sales out of China, which accounts for more than half of its revenues.

Yum Brands (YUM) slumped 18.8 percent after the restaurant operator cut its full-year profit forecast, citing a slower-than-expected recovery in its key China market and the drag from a strong U.S. dollar.

The S&P health index, up 1.5 percent, was the biggest gainer. A sell-off in health care and biotech stocks had weighed on the market Tuesday.

%VIRTUAL-pullquote-On days where investors are looking for fallen angels, health care helps fill that equation today.%Health care was led by Regeneron Pharmaceuticals (REGN) and Amgen (AMGN), both up more than 4 percent. Express Scripts (ESRX) said it reached deals to cover two costly new cholesterol drugs produced by the two companies.

"On days where investors are looking for fallen angels, health care helps fill that equation today," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "What was a drag over past few days is now the leader."

The S&P materials index rose 1.3 percent and the S&P energy index was up 1.3 percent even after U.S. crude settled down 1.5 percent.

Gold and silver futures have been climbing in recent sessions and are up since the end of September, giving a boost to materials shares.

Gains in U.S. indexes, even after the reversal of an oil rally, suggest that the worst might be over for commodity prices hit by concerns about China's economy, said Warren West, principal at Greentree Brokerage Services in Philadelphia.

'Finding a Bottom'

"We're not so worried about commodities, we think they're finding a bottom here," West said.

The Dow Jones industrial average (^DJI) rose 0.7 percent to end at 16,912.29. The Standard & Poor's 500 index (^GSPC) ended 0.8 percent higher 1,995.83 after trading down 0.2 percent earlier in the day, and the Nasdaq composite (^IXIC) added 0.9 percent to 4,791.15.

After Wednesday's rise, which was its sixth in seven sessions, the S&P is down 3.1 percent for the year. The Dow is off by 5.1 percent.

S&P 500 companies are now expected to report a 4.4 percent fall in third-quarter profit, the biggest decline in six years, according to Thomson Reuters (TRI) data. The index is trading around 15.5 times expected earnings, in line with its long-term average.

Twitter (TWTR) jumped 8 percent after Saudi Arabian billionaire Prince Alwaleed bin Talal and his investment firm raised their stake to more than 5 percent.

Advancing issues outnumbered declining ones on the NYSE by 2,385 to 670 On the Nasdaq, 2,061 issues rose and 776 fell. The S&P 500 index showed eight new 52-week highs and no new lows, while the Nasdaq recorded 48 new highs and 34 new lows.

About 8.3 billion shares changed hands on U.S. exchanges, above the 7.4 billion average for the previous 20 sessions, according to Thomson Reuters data,

-Tanya Agrawal, Abhiram Nandakumar and Devika Krishna Kumar contributed reporting.

What to watch Thursday:
  • The Labor Department releases weekly jobless claims at 8:30 a.m. Eastern time.
  • Freddie Mac releases weekly mortgage rates at 10 a.m.
  • The Federal Reserve releases minutes from its September interest-rate meeting at 2 p.m.
Earnings Calendar
These selected companies are scheduled to release quarterly financial results:
  • Alcoa (AA)
  • Domino's Pizza (DPZ)
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