Health care rises as stocks rebound
NEW YORK — Stocks broke a three-day losing streak Tuesday and ushered in the new year with broad gains. Health care stocks, which struggled for most of last year, climbed.
Stocks started the day with a surge as the Dow Jones industrial average rose 175 points in the first hour of trading. Bond yields jumped, which took bank stocks higher. The price of oil also rose early on, but it began slipping after 10 a.m. Investors started buying again late in the day, however, and major indexes closed with a flourish.
Energy companies, banks and technology companies made some of the largest gains and lower-risk investments like utility companies lagged the rest of the market. That's a sign investors expect stronger economic growth that will help those companies do more business.
“Corporate earnings are telling us that it's a bull market,” said Karyn Cavanaugh of Voya Investment Strategies. Cavanaugh said earnings and revenues look “very good” for 2017.
The Dow Jones industrial average jumped 119.16 points, or 0.6 percent, to 19,881.76. The Standard & Poor's 500 index rose 19 points, or 0.8 percent, to 2,257.83. The Nasdaq composite gained 45.97 points, or 0.9 percent, to 5,429.08.
The Russell 2000 index, which tracks small-company stocks, added 8.36 points, or 0.6 percent, to 1,365.49. The Russell rose almost 20 percent last year and did far better than indexes focused on larger companies.
Drug companies helped take health care stocks higher. Merck rose $1.28, or 2.2 percent, to $60.15. Biotech giant Amgen picked up $4.52, or 3.1 percent, to $150.73 and prescription drug distributor McKesson gained $6.98, or 5 percent, to $147.43.
The S&P 500's health care index fell 4 percent last year. The S&P 500 itself rose 9.5 percent for the year and all of its other industrial sectors rose at least a small amount.
Investors have been avoiding drug company stocks because they're worried the government will intervene to reduce prices. But Cavanaugh said the stocks are appealing because they've been reporting better growth than most other industries.
Xerox surged $1.14, or 19.8 percent, to $6.89 after it split itself in two, a move the company announced almost a year ago. The original Xerox kept its printer and copier business. The second company will focus on business process outsourcing, providing payment processing and other services. Xerox will receive $1.8 billion in cash.
The new company, Conduent, now trades under the ticker symbol “CNDT.” That stock lost $1.18, or 7.9 percent, to $13.72.