US stocks ended higher on Tuesday with a boost from high drama in the healthcare sector.
The overall S&P 500 ended up 0.6% at 2139.
In data, the consumer price index, a key measure of inflation, softened in September, while headline consumer prices accelerated. The data adds to the uncertainty over whether the Federal Reserve will carry through with its first rate rise of 2016 before the end of the year.
“Today’s data shows that inflation is on the rise in the US, although it still remains below Fed Chair Janet Yellen’s much touted two percent target,” said Dennis de Jong, managing director at UFX.com.
“Yellen has spoken this week about the benefits of higher inflation, raising speculation that the long-awaited interest rate hike will be further delayed (beyond December),” he added.
The healthcare sector may be the worst performer on the S&P 500 so far this year, falling 2.6% to date, but on Tuesday it led the broad-based rally on the benchmark index.
The S&P 500 healthcare sector rose 1.1% and was the biggest gainer on the index after private health insurer UnitedHealth Group (NYSE:UNH) reported better than expected results that triggered a rally in shares of its rivals tool. UnitedHealth shares ended up 6.9% at $143.39.
But for Johnson & Johnson (NYSE:JNJ), the world’s largest healthcare company, it was a day of mixed emotions. While its third-quarter earnings beat forecasts, rival Pfizer (NYSE:PFE) announced it would launch a cheaper product in the US to rival JNJ’s flagship drug as soon as November. Read more.
Pfizer shares ended up 0.6% at $32.69 while J&J were down 2.6% at $115.41.
But online entertainment streamer Netflix (NASDAQ:NFLX) had its best share price day since 2013 and was the benchmark ticker’s top riser, of 19% to $118.79, after overnight reporting a Street-defying surge in subscribers to its platform.
The S&P Midcap 400 index also rose by 0.6%, to 1527, and was led by Avon Products (NYSE:AVP) up 7% to $6.62. Second-biggest riser was Domino's Pizza Inc (NYSE:DPZ) up 4.9% to $159.45 after announcing bullish third quarter results.
The S&P Smallcap 600 was up 0.3% to 737 and led by Resources Connect (NASDAQ:RECN) up 11.7% to $14.59 after initiating a Dutch auction buyback of up to 6mln of its shares.
But two top stocks to watch on Wednesday will be PC chipmaker Intel (NASDAQ:INTC) and internet portal Yahoo (NASDAQ:YHOO).
Intel shares declined by 4.2% to $36.16 after hours on Tuesday after the chipmaker said its quarterly outlook may miss Wall Street estimates.
The Silicon Valley firm said that it expects to log sales of $15.2bn to $16.2bn in the current quarter, compared with Wall Street projections of $15.9bn.
Meanwhile, Yahoo beat earnings expectations in the third quarter putting it on track to deliver a better-than-expected year, as investors watch nervously to see whether Verizon (NYSE:VZ) asks for a discount on the $4.8bn deal after a recent large data breach. Yahoo shares were up 1.2% to $42.16 after hours.
Open
US stocks opened firmly up on Tuesday after a smattering of bullish earnings reports from companies including Johnson & Johnson, Goldman Sachs and Netflix.
The S&P 500 market bellwether was up 0.6% at 2138 and led by Netflix (NASDAQ:NFLX), up 18.7% to $118.41. After the bell on Monday, Netflix made a welcome comeback by announcing it added many more customers than expected last quarter, sending its stock up 20% after hours.
Before the opening bell, Goldman Sachs (NYSE:GS) became the latest Wall Street bank to beat earnings expectations with third-quarter profit jumping almost 60% thanks in part to a comeback in its bond trading business. Goldman shares were up 1.4% to $171.47.
The world’s largest healthcare company Johnson & Johnson’s (NYSE:JNJ) third-quarter earnings per share came in 3 cents higher than analysts’ forecasts.
However, its shares started lower and were down 1.8% at $116.39 after Pfizer, which overnight said it would release a cheaper version of JNJ’s immune drug Remicade, confirmed on Tuesday its Inflectra injection, a biosimilar version of Johnson & Johnson’s JNJ blockbuster drug Remicade, will be available in the U.S. in late November.
The S&P Midcap 400 was up 0.5% to 1525.
Pre-Open
Wall Street shares are set to join the global equity rally on Tuesday and open higher.
Video streaming titan Netflix (NYSE:NFLX) surged 20% in extended trading after the firm blasted ahead of market expectations with its third quarter earnings.
Shares in New York added 19.52% to US$119.32 after a year so far where the trajectory has been downwards.
The three months saw it add 3.6 million new customers, meaning it now has more than 86 million subscribers.
Stocks end down on Monday
On Monday, the S&P 500 market bellwether closed down 0.3% at 2126 and led by Southwestern Energy Company (NYSE:SWN), down 3.3% to $12.47 after oil prices sagged.
Meanwhile, the S&P Midcap 400 closed down 0.1% at 1518 and led south by Gulfport Energy Corp (NASDAQ:GPOR), down 5.6% to $27.61.
The Dow Jones industrial benchmark was down over 51 points, at 18,086, while the S&P 500 fell six points to stand at 2,126.
The tech heavy Nasdaq dropped 14 to stand at 5,199.
Meanwhile in futures trading today, the S&P 500 is up over ten points, while the Dow is an impressive 71 ahead. The Nasdaq exchange is 26 points ahead.
A clutch of earnings are expected today before the bell, including from investment bank Goldman Sachs (NYSE: GS) and Harley-Davidson (NYSE:HOG).
Investors eyes are on a US inflation report for September, due to be released later, coming after a similar UK report, which showed prices gaining due to the weaker pound.
Gold is up 0.47% at the time of writing to stand at US$1,262.5 an ounce while US crude oil is also up 0.82% at US$50.36.