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New York - US stocks struggled to add to the biggest rally in nearly a month, as a profit warning from UnitedHealth Group jolted the health-care sector a day after the Federal Reserve eased concern that higher interest rates would derail economic growth.
UnitedHealth Group slumped 4.5% after saying it may pull out of the Obamacare insurance exchange market amid high costs. Competitors Anthem and Aetna fell more than 6%. Consumer staples and technology shares countered with gains as Keurig Green Mountain jumped 25% on better- than-expected results, and Salesforce.com advanced 4.6% on a stronger-than-estimated outlook.
Correction was very rapid
The Standard & Poor’s 500 Index rose less than 0.1% to 2 083.69 shortly before lunch in New York, after rising 1.6% on Wednesday. The Dow Jones Industrial Average added 10.22 points, or 0.1%, to 17 747.38. The Nasdaq Composite Index also increased 0.1%.
“The market probably needs to move sideways here for a while,” David Spika, global investment strategist for GuideStone Capital Management, said by phone. “The way we rebounded from the correction was very rapid. There are more reasons to go down than up.”
Minutes from the Federal Reserve’s October meeting released on Wednesday indicated that policy makers believe the economy is strong enough withstand higher rates as early as next month, while stressing that the pace of any tightening will be gradual.
Borrowing costs
Gains among banks and biotechnology companies on Wednesday led a rally that took the S&P 500 to within 2.3% of its May all-time high. The gauge is up about 12% from the bottom of a summer selloff touched off by worries that a slowdown in China’s economy would spread. Caution over the impact of China’s weakness kept the Fed from raising rates in September.
Recent data has bolstered the case for raising borrowing costs for the first time since 2006, with the latest payroll report - released after the Fed’s October meeting - showing the biggest increase in hiring this year. A report on Thursday showed initial jobless claims continued to hover around four-decade lows as the labor market strengthens toward full employment.
