|Wall Street rallies lifting S&P near December end record close; Netflix shares tumble
Stocks rallied Tuesday, ending a slump that had ushered in the New Year.
The Standard and Poor's 500 index climbed the most in three weeks, led by gains for health care stocks. UnitedHealth Group, the largest health insurer in the US, and Johnson & Johnson both climbed on broker recommendations, AP reports.
After three straight declines, the S&P 500 would have matched its worst opening of a year since 1978 had it closed lower for a fourth day. The stock market's slow start to 2014 contrasts with last year's exceptional performance, when the S&P 500 climbed to record levels after surging almost 30 percent.
The S&P 500 gained 11.11 points, or 0.6 percent, to 1,837.88, the biggest since December 18. Nine of the 10 sectors that make up the index advanced.
The Dow Jones industrial average climbed 105.84 points, or 0.6 percent, to 16,530.94 The Nasdaq composite gained 39.50 points, or 1 percent, to 4,153.18.
UnitedHealth group gained US$2.27, or 3.1 percent, to US$76.51 after analysts at Deutsche Bank said they expected the largest health insurance company to charge customers more in premiums this year.
Johnson & Johnson climbed US$1.96, or 2.1 percent, to US$94.29 after analysts at RBC Capital raised their outlook on the stock to “outperform,'' in part due to optimism on sales of the diabetes drug Invokana.
Investors will get more insight into the Fed's thinking when minutes from the Federal Open Market Committee are released Wednesday.
Despite Tuesday's gains, stocks have started the year off on uncertain footing. Materials companies have declined 1.6 percent so far this year, led by Cliffs Natural Resources. The mining company, which was the second-biggest loser in the S&P 500 last year, is extending its slump. It's down 7 percent this year.
Manufacturers and vendors of consumer staples, such as grocers, tobacco companies and brewers, have also struggled in the first few days of this year. They are down 1.2 percent.
In government bond trading, the yield on the 10-year Treasury note fell to 2.94 percent from 2.96 percent Monday.
Among the biggest losers on Tuesday was Netflix.
The online video streaming company, the biggest gainer in the S&P 500 last year, fell US$20.07, or 7.8 percent, to US$339.50, after analysts at Morgan Stanley cut their outlook on the stock to “underweight.'' The brokerage says the online video service will face increasing competition from services such as Hulu Plus, Amazon Prime and HBO GO.
Mattel also dropped. The toy maker fell 58 US cents, or 1.2 percent, to US$46.04, after analysts at Goldman Sachs advised their clients to sell the stock. Goldman is predicting that the company's earnings will struggle to match expectations as sales stagnate.
Gold fell US$8.40, or 0.7 percent, to US$1,229.60 an ounce.