NEW YORK (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 <NFLX.O>, 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 <REGN.O>, ending 0.8 percent higher at $308.87, and Gilead
Sciences Inc <GILD.O>, up 1.3 percent at $73.03.
Alexion Pharma <ALXN.O> 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 <.VIX>, 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 <.DJI> rose 91.19 points, or 0.56
percent, to close at 16,367.88. The Standard & Poor's 500 Index
<.SPX> gained 8.18 points, or 0.44 percent, to finish at 1,865.62.
The Nasdaq Composite Index <.IXIC> advanced 7.88 points, or 0.19
percent, to end at 4,234.27.
The Nasdaq biotechnology sector index <.NBI> 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.
Supporting the rebound in momentum stocks on Tuesday, bullish bets
were placed on those names in the options market. Facebook <FB.O>
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.
