New York: US stocks rebounded Monday, hitting fresh 17-month highs, lifted by health care-related stocks after Congress passed a landmark overhaul of the sector that greatly expands insurance coverage.
The Dow Jones Industrial Average rose 43.91 points (0.41%) to finish at 10,785.89.16, rebounding from Friday’s loss that snapped an eight-session winning streak.
The tech-rich Nasdaq composite advanced 20.99 points (0.88%) to 2,395.40 while the broad-market Standard & Poor’s 500 index climbed 5.91 points (0.51%) to 1,165.81.
“Despite an early dip into the red this morning, the equities market kicked off the week on a high note today,” said Elizabeth Harrow at Schaeffer’s Investment Research.
The market’s about-face came as investors scrutinized the House of Representatives’s 219-212 vote late Sunday to approve a historic health overhaul in the most sweeping social policy shift in four decades.
The House vote handed President Barack Obama the biggest triumph of his presidency. He was expected to sign the bill into law within days.
The Senate will then take up a package of changes, which the House approved 220-211, as early as Tuesday in a bid to complete its work on the overhaul.
“While many analysts predicted that reform would be a negative catalyst for the sector, traders today were simply relieved to see some of the uncertainty surrounding health care stocks lifted,” Harrow said.
Pharmaceutical shares surged amid expectations they would benefit from the expanded health care coverage approved by Congress.
Pfizer leaped 1.42% to $17.15 and Merck added 0.63% at $38.30. Among insurers, Aetna gained 0.52% at $34.64 and Cigna was up 0.54% at $37.28.
Ailing government-controlled insurer AIG plunged 4.05% to $33.39 after it emerged that former chief executive Maurice Greenberg was dumping 10 million shares over the next three years at a 20% discount of Friday’s closing share price.
Traders also kept an eye on German resistance to a European Union financial rescue plan for eurozone member Greece, whose huge sovereign debt is rocking confidence in the euro.
In the tech space, Google dropped 0.45% to $557.50. The Internet giant announced it had stopped censoring its Chinese-language search engine Google.cn and was redirecting mainland Chinese users to an uncensored site in Hong Kong.
Software firm Novell soared 4.43% to $5.89 after rejecting a takeover bid from hedge fund Elliott Associates valued at an estimated two billion dollars.
The week’s relatively light economic calendar will bring data on the troubled housing sector, durable goods orders and the weekly report on US unemployment insurance claims.
“This could be a quiet week for the US with less important economic data out and many traders on spring break,” said Andrew Busch at BMO Capital Markets.
“We’ll get some early relief for health care stocks on the perception that the health care legislation is done. But reality will set in as there will be many more votes during the reconciliation process and the markets will not be pleased watching the political sausage get made.”
The bond market gained. The yield on the 10-year US Treasury bond fell to 3.663% from 3.687% Friday that on the 30-year bond slipped to 4.569% from 4.579%. Bond prices and yields move in opposite directions.