US STOCKS-Wall St rebounds; biotech shares snap losing streak
* Biotech shares rise, rebounding after recent losses
* Consumer confidence hits six-year high in March
* Options on momentum stocks suggest more bullish bets
* Dow up 0.6 pct; S&P 500 up 0.4 pct; Nasdaq up 0.2 pct (Updates to close)
By Angela Moon
NEW YORK, March 25 (Reuters) - U.S. stocks ended higher on Tuesday, rebounding from a two-day decline as the hard-hit biotechnology sector regained its momentum and a strong read on consumer confidence increased optimism about the economy.
Trading was choppy throughout the day with the Nasdaq at one point turning lower, led by a sharp reversal in biotech shares.
.So-called momentum stocks were still down for the day but off their lows, including Netflix, down 2.1 percent at $370.84. Netflix has declined for 14 of the past 15 sessions, falling almost 19 percent over that stretch
Biotech shares also reversed earlier losses, including Regeneron Pharma, ending 0.8 percent higher at $308.87, and Gilead Sciences Inc, up 1.3 percent at $73.03.
Alexion Pharma ended 2.2 percent higher at $153.08.
The rebound in some so-called "momentum" names was an indication that while concerns persist about geopolitical tensions in Ukraine and slowing growth in China, investors are not so bearish on equities as to sell them wholesale.
The CBOE Volatility Index, a gauge of investor anxiety, fell 7.1 percent to 14.02.
"Investors become momentarily concerned about valuation, but that pullback was healthy, and we could see modest gains from here just because equities remain the most attractive place to be," said Kristina Hooper, head of portfolio strategies at Allianz Global Investors in New York, which has $475 billion in assets under management.
"Biotechs continue to look attractive since they offer a higher level of growth, and in fact, they look more attractive than they did because valuations improved in the selloff."
The Dow Jones industrial average rose 91.19 points, or 0.56 percent, to close at 16,367.88. The Standard & Poor's 500 Index gained 8.18 points, or 0.44 percent, to finish at 1,865.62. The Nasdaq Composite Index advanced 7.88 points, or 0.19 percent, to end at 4,234.27.
The Nasdaq biotechnology sector index rose as high as 2,564.58 and fell as low as 2,463.93. The index ended at 2,502.19, up just 0.1 percent.
Data showed consumer confidence rose more than expected in March, climbing to its highest level since January 2008. The report was the latest in a string of positive reads on the U.S. economy that supported theories that softness early this year was related to bad weather and not weakening fundamentals.
Volume of about 6.6 billion shares traded on U.S. exchanges, slightly below the 6.9 billion average so far this month, according to data from BATS Global Markets.
BULLISH BETS ON MOMENTUM STOCKS
Supporting the rebound in momentum stocks on Tuesday, bullish bets were placed on those names in the options market. Facebook was the second-most actively traded equity option.
"Momentum stocks took all the punches Monday, with biotech especially and social media stocks taking a thumping. In short, last year's winners are falling hardest as investors run scared," said Andrew Wilkinson, chief market analyst at Interactive Brokers LLC in Greenwich, Connecticut.
"However, as we look at the pattern of investor interest expressed through options trading, there are few signs that derivative traders are prepared to throw in the towel."
The largest open interest for Facebook options was seen in $70 calls that expire in April and May. The stock ended 1.2 percent higher at $64.89. Call options are generally viewed as bullish bets, expecting the stock to move higher.
Investors continued to watch global issues cautiously. On Monday, major stock indexes fell on concerns that the crisis in Ukraine could escalate, pushing traders to take profits in such high-flying sectors as biotech and Internet shares. Those names rebounded on Tuesday, with some of Monday's biggest decliners topping the list of advancing S&P 500 names.
In the latest on the housing market, U.S. single-family home prices rose slightly more than expected in January, according to the S&P/Case-Shiller composite index of 20 metropolitan areas, while new home sales fell more than expected in February. (Editing by Jan Paschal)