Dow, S&P gain but Nasdaq dips as healthcare lags

By Chuck Mikolajczak

NEW YORK (Reuters) - The Dow and S&P 500 advanced on Thursday after a round of positive corporate earnings announcements, but gains were curbed and the Nasdaq lost ground on a drop in the healthcare sector.

DowDuPont was up 2.8 percent as the biggest boost to the S&P 500. It forecast third-quarter profit well above Wall Street's expectations ahead of the combined company's first earnings report next week.

Twitter jumped 18.5 percent after the company said it could turn its first-ever profit in the fourth quarter, helped by cost cuts and new sources of revenue.

"This earnings season so far looks good, mixed as always and obviously there is a lot more to go here in terms of earnings," said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York.

 

The healthcare sector, off 1.03 percent, held gains in check, led lower by a 16.4-percent plunge in Celgene , the biggest drag on the S&P 500 and the Nasdaq. The company reported lower-than-expected sales for its psoriasis drug Otezla and lowered its overall 2020 sales outlook.

Losses accelerated in the sector after the St. Louis Post-Dispatch reported, citing public records, that Amazon gained approval from a number of state pharmaceutical boards to become a wholesale distributor. In addition, President Donald Trump announced steps to fight the opioid crisis in the United States by declaring it a national public health emergency.

"Even though it has been talked about for months and the stocks had taken a hit several times, when reality hits there is always another downside to it and the group is getting slammed," said Ghriskey.

Shares of the online retailer climbed about 6 percent following the closing bell after its quarterly results.

Trump's search for a new Federal Reserve chair narrowed down to Fed Governor Jerome Powell and Stanford University economist John Taylor, according to a Politico report. A White House official told Reuters that no final decision had been made.

The Dow Jones Industrial Average <.DJI> rose 71.61 points, or 0.31 percent, to 23,401.07, the S&P 500 <.SPX> gained 3.26 points, or 0.13 percent, to 2,560.41 and the Nasdaq Composite <.IXIC> dropped 7.12 points, or 0.11 percent, to 6,556.77.

As third-quarter earnings season nears the half-way mark, 74 percent of companies have topped expectations, above the 72 percent beat rate for the past four quarters.

However, earnings growth for the quarter is currently 5.3 percent, well below the double-digit growth rates of the prior two quarters. With major U.S. indexes at record levels, earnings have been scrutinized to see if they warrant stretched valuations.

Also denting healthcare names was a fall of 4.8 percent in Bristol-Myers Squibb after its quarterly profit fell short of estimates due to higher costs and an inventory write-off. AbbVie dropped 2.4 percent after reporting deaths in psoriasis studies.

Late in the session, shares of Aetna surged after Dow Jones reported CVS Health was in talks to buy the company. Aetna shares closed up 11.5 percent at $178.60

Advancing issues outnumbered declining ones on the NYSE by a 1.08-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favuored advancers.

About 7.04 billion shares changed hands in U.S. exchanges, above the 5.97 billion daily average over the last 20 sessions.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)