* S&P 500 inches closer to all-time intraday high
* Healthcare stocks rally, Humana is S&P's top percentage
* Indexes up: Dow 0.5 pct, S&P 0.4 pct, Nasdaq 0.4 pct
By Caroline Valetkevitch
NEW YORK, April 2 U.S. stocks rose on Tuesday,
moving the S&P 500 closer to its all-time intraday high, as
increased payment rates for some health insurers boosted the
sector and Cyprus concluded bailout talks.
The U.S. government dropped plans to cut payments for
private Medicare Advantage insurers and instead said it would
allow a 3.3 percent raise.
Shares of Humana, which derives about two-thirds of
its revenue from Medicare Advantage business, jumped 6.2 percent
to $79.64 and was the biggest percentage gainer on the S&P 500.
UnitedHealth Group gained 6.2 percent to $62.67.
"They didn't expect the result that they got. That will help
with their bottom line," said Quincy Krosby, market strategist
at Prudential Financial in Newark, New Jersey.
Stocks also gained because "Cyprus was given a reprieve,"
Cyprus's deal, which still requires ratification, would mean
the country receives a 10 billion euro loan and will have until
2018 to carry out measures to shore up its finances. The
country's finance minister resigned after concluding the deal.
The S&P 500 last Thursday set an all-time closing high but
has been unable to reach its intraday record of 1,576.09, a
level that analysts say could draw in even more investors.
The Dow Jones industrial average was up 72.46 points,
or 0.50 percent, at 14,645.31. The Standard & Poor's 500 Index
was up 6.91 points, or 0.44 percent, at 1,569.08. The
Nasdaq Composite Index was up 14.32 points, or 0.44
percent, at 3,253.50.
Healthcare sector stocks are still seen as cheap relative
to the overall market. Humana, which has a market cap of about
$11.9 billion, has a forward price-to-earnings ratio of 9.4,
below the S&P 500 P/E average ratio of about 16.5. UnitedHealth
has a P/E ratio of 10.6 and Cigna has a P/E ratio of 9.7.
"We do think that healthcare stocks are a nice combination
of dividend yields, growth and low valuations and we are very
constructive on the sector," said Jim Russell, senior equity
strategist for U.S. Bank Wealth Management in Cincinnati.
The broad market's rise countered Monday's sell-off. Most
investors expect moves to be limited this week before Friday's
U.S. monthly payrolls report.
The March jobs report could give clues on how successful the
Federal Reserve has been in lowering unemployment, one of the
primary headwinds for the economy. About 200,000 jobs were
created last month, according to a Reuters poll, down from
236,000 in February.
In an effort to bring down the unemployment rate, the Fed
has maintained an accommodative monetary policy, which has also
Strengthening U.S. data has also helped stocks. Among
Tuesday's reports, February factory orders rose 3 percent,
slightly above expectations.
A weak reading on U.S. manufacturing on Monday sparked a
pullback in stocks.
Other gainers included Hertz Global Holdings shares,
which rose 7.6 percent to $23.58 after the company forecast
strong earnings and revenue through 2015 due to increasing
global demand for car rentals and benefits from its recently
completed acquisition of Dollar Thrifty.
Also in the healthcare sector, shares of Cigna were
up 3.5 percent at $65.10.
Among decliners, Delta Airlines Inc shares were off
6.6 percent at $15.20. Delta's unit revenue for March rose 2
percent from a year earlier but was below its forecast due to
lower-than-expected demand and temporary inefficiencies during
implementation of new technology.
Shares of Nasdaq OMX Group Inc. plunged 11.4
percent to $28.36 after agreeing to buy a BGC Partners Inc.
trading platform. BGC shares were up 46.8 percent at
Shares of Hewlett-Packard fell 5.7 percent to $21.99
after Goldman Sachs downgraded them to "sell."