U.S. stocks rise as health care and energy companies soar
NEW YORK >> U.S. stocks broke a two-day losing streak Wednesday as investors bought up drugmakers and other health care companies. Energy companies also jumped as the price of oil surged.
Biotech drug companies, which have been mired in a long slide, made their biggest gains in almost five years. That came after Pfizer, one of the largest pharmaceutical companies in the world, gave up on a plan to buy Botox maker Allergan for $160 billion and investors wondered if it will look elsewhere.
The gains were only enough to wipe out most of the market’s losses from a day earlier. Stocks wavered in recent weeks as investors wait for quarterly earnings to start pouring in, and many are bracing for another shaky quarter.
Jack Ablin, chief investment officer of BMO Private Bank, said it’s going to be another weak earnings period, and the only way stocks will trade much higher is if companies are able to give optimistic projections for the rest of the year.
“Without an improvement in earnings or a projection of earnings growth, our outlook is kind of tapped out,” he said.
The Dow Jones industrial average gained 112.73 points, or 0.6percent, to 17,716.05. The Standard & Poor’s 500 index rose 21.49 points, or 1.1 percent, to 2,066.66. The Nasdaq composite index picked up 76.78 points, or 1.6 percent, to 4,920.72.
Pfizer and Allergan confirmed Wednesday that they are walking away from their proposed merger after the U.S. Treasury Department announced newrules thatmade the deal, and others like it, far less appealing. Pfizer rose $1.57, or 5 percent, to $32.93, its biggest gain since 2011.
Pfizer was ready to make one of the largest corporate deals in history for Allergan as it tried to boost its salesand cut its tax bill. Biotechnology companies, which make complex and costly drugs, climbed higher. Celgene, whichmakes treatments for cancer, gained $6.10, or 6 percent, to $108.22. Vertex Pharmaceuticals rose $7.15, or 8.5 percent, to $91.31.
Biotech stocks are facing pressure from legislators over the price of their drugs, and investors fear that their ability to raise prices will be impeded.
Energy companies gained ground as benchmark U.S. crude rose $1.86, or 5.2 percent, to close at $37.75 a barrel in New York. Brent crude, a bench mark for international oils, added $1.97, or 5.2 percent, to close at $39.84 a barrel in London. The price of oil has skidded in recent days before making small gains Tuesday.
Chevron picked up $2.17, or 2.3 percent, to $94.84 and Exxon Mobil added $1.10, or 1.3 percent, to $83.31. Hess rose $2.74, or 5.3 percent, to $54.
Oilfield services companies Halliburton and Baker Hughes also traded higher after the U.S. government sued to block them from combining. Halliburton had agreed to buy its rival for more than $34 billion in November 2014, after oil prices began to fall. Baker Hughes gained$3.47, or 8.8 percent, to $42.83. Halliburton climbed $2.04, or 5.9 percent, to $36.44.
While the pace of company earnings will climb next week, a few companies made big moves Wednesday after they disclosed their results. Constellation Brands, the owner of Corona, Negra Modelo and Pacifico beers, reported solid quarterly results and raised its profit forecasts for the year. Its stock rose $8.98, or 5.9 percent, to $160.34.
Electronic payment processing company Global Payments gained $5.71, or 8.8 percent, to $70.86 after it posted strong quarterly results.
Lighting maker Cree said its sales will fall far short of expectations because of new product delays and software problems. The company said it may take a loss in the third quarter. Its stock lost$4.24, or 14.6 percent, to $24.81.