Earnings, healthcare give Wall Street sixth straight gain

NEW YORK Tue Apr 22, 2014 5:28pm EDT

1 of 2. Traders work on the floor of the New York Stock Exchange April 21, 2014.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - U.S. stocks rose on Tuesday as a host of solid earnings reports, along with strength in the healthcare sector, helped lift the S&P 500 and Nasdaq to their sixth straight advance.

Netflix Inc (NFLX.O) surged 7 percent to $372.90 a day after reporting strong subscriber growth, a sign the trading favorite still had room to grow despite recent valuation concerns. With the day's gain, the stock moved to the plus side for the year after a 21 percent drop in March.

The S&P healthcare index .SPXHC, up 1 percent, was the best performer of the 10 major S&P sectors. Allergan Inc (AGN.N) jumped 15.2 percent to $163.65 a day after activist investor William Ackman teamed up with Canadian drugmaker Valeant Pharmaceuticals International Inc (VRX.TO)(VRX.N) to bid for the company. U.S.-listed Valeant shares gained 7.5 percent to $135.41.

A deal between Novartis (NOVN.VX) and GlaxoSmithKline (GSK.L), in which the two traded over $20 billion worth of assets in an effort to cope with healthcare spending cuts and generic competition, also bolstered the healthcare sector. U.S.-listed shares of Novartis (NVS.N) gained 1.3 percent to $86.56, while Glaxo (GSK.N) rose 4.1 percent to $55.30.

Better-than-expected earnings have lifted stocks recently, though companies have largely been exceeding reduced forecasts. Profits are seen rising 1.1 percent this quarter, down from the 6.5 percent growth rate estimated at the start of the year.

"What was baked into the market, in spite of a market near an all-time high, was a sloppy earnings season," said Mike Serio, regional chief investment officer of Wells Fargo Private Bank in Denver.

"We've had some really good beats at this point, we've had a couple of good announcements today, you throw on the M&A activity in the drug sector, at least in the short term, everybody looks pretty excited about this market."

Dow components Travelers Cos Inc (TRV.N) and United Technologies Corp (UTX.N) both beat expectations, and United Tech raised the low end of its full-year profit outlook. Shares of Travelers rose 0.6 percent to $86.89 while United Tech added 0.8 percent to end at $119.19.

McDonald's Corp (MCD.N) reported earnings that fell alongside a drop in U.S. same-store sales, and its stock slipped 0.4 percent to $99.32.

With 20 percent of the S&P 500 having reported results through Tuesday morning, 63 percent have topped earnings expectations, according to Thomson Reuters data, matching the long-term average. On the revenue side, 51 percent have exceeded forecasts, below the 61 percent long-term average.

The Dow Jones industrial average .DJI rose 65.12 points or 0.40 percent, to end at 16,514.37. The S&P 500 .SPX gained 7.66 points or 0.41 percent, to 1,879.55. The Nasdaq Composite .IXIC added 39.912 points or 0.97 percent, to 4,161.458.

After the close, Gilead Sciences Inc (GILD.O) advanced 1.1 percent to $73.65 after the drugmaker said its new $1,000 hepatitis C pill generated quarterly sales of $2.27 billion, helping the company's quarterly net profit nearly triple.

In another positive sign for equities, the Dow Jones Transportation Average .DJT, up 0.6 percent, closed at its first record high since April 2. The index got a boost from airlines such as United Continental Holdings (UAL.N), up 4.6 percent, and Alaska Air Group Inc (ALK.N), up 1.3 percent, which rose on a 2 percent drop in oil prices.

Facebook Inc (FB.O) shares rose 2.9 percent to $63.03, helping to lift the Nasdaq 100 .NDX and the S&P 500. Credit Suisse upgraded the social networking company's stock to "outperform" on higher expectations for its long-term average revenue per user.

Volume was light, with about 5.88 billion shares traded on U.S. exchanges, below the 6.7 billion average so far this month, according to data from BATS Global Markets.

Advancing stocks outnumbered declining ones on the NYSE by 2,227 to 811, while on the Nasdaq, advancers beat decliners 1,900 to 727.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski and Jan Paschal)