Stocks rally, led by surging biotechs
NEW YORK — Stocks ended higher on Wednesday as surging biotech shares helped investors shrug off disappointing retail sales data.
Retail stocks capped the market’s gains after Commerce Department data showed that U.S. retail sales unexpectedly stalled in July, marking the weakest report since January. Macy’s Inc quarterly earnings missed analysts’ estimates and the department store operator slashed its full-year same-store sales forecast, driving the stock down 5.5 percent to $56.47.
Other major retailers, including Wal-Mart Stores Inc , are expected to report results on Thursday. Wal-Mart shares slipped 0.3 percent to $74.03.
Although the weak retail data pointed to some loss of momentum in the economy, the July reading could give the Federal Reserve more support to move slowly on raising interest rates, a situation that favors investors in equities.
“Investors seem to be looking past the retail numbers and seeing the silver lining, which is that the Fed could be less hawkish and keep interest rates down for longer,” said Lawrence Glazer, managing partner at Mayflower Advisors in Boston.
“Domestically, despite some questionable earnings reports, areas like biotech, transports and Amazon all gave a boost to markets today.”
All 10 S&P primary sector indexes gained, even as some heavyweights’ stocks plunged on missed earnings and downgraded revenue forecasts.
Biotech shares surged, with the Nasdaq Biotech Index climbing 2.1 percent in sync with a rally in the stocks of InterMune Inc and Jazz Pharmaceuticals PLC.
The Dow Jones Transportation Average gained 0.7 percent.
Investors have been sensitive in recent weeks to signs of flaring tensions abroad, but were not affected on Wednesday. The White House’s declaration that the United States would not send combat ground troops to Iraq “has given the market some upward momentum,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
The Dow Jones industrial average rose 91.13 points, or 0.55 percent, to close at 16,651.67. The S&P 500 was up 12.97 points, or 0.67 percent, to close at 1,946.72. The Nasdaq Composite added 44.88 points, or 1.02 percent, to end at 4,434.13.
Cisco Systems Inc reported a smaller-than-expected drop in quarterly revenue after the bell, driving its stock down 2.9 percent in extended-hours trading. The network equipment maker had expected to see revenue decline between 1 percent and 3 percent, but reported a drop of only 0.5 percent instead.
During the regular session, an S&P index of healthcare stocks jumped 1.2 percent and led the S&P 500 higher. Vertex Pharmaceuticals shares, the biggest gainer in the S&P 500 healthcare sector, shot up 3.9 percent to $88.75. Nearly two weeks ago, the company said it had received European approval to use its treatment Kayldeco on patients with cystic fibrosis.