Health stocks lift Wall Street as banks dip ahead of expected rate hike

Healthcare stocks helped prop up Wall Street on Wednesday, although banks slipped ahead of a widely expected interest rate hike by the U.S. Federal Reserve.

With a third rate hike all but certain, and chances of a fourth increase in December firming after robust consumer confidence data on Tuesday, investors are keen to know whether the Fed will officially end the era of easy money.

Financial stocks overall were 0.19 percent lower, reflecting the drop in bank shares. Only JPMorgan, Citigroup and M&T Bank eked out gains.

"If the Fed raises short-term interest rates, that serves to flatten the yield curve and banks want a steeper yield curve," said Linda Duessel, Senior Equity Strategist at Federated Investors, in Pittsburgh, Pennsylvania.

"The more the Fed raises the short-term interest rates that makes it expensive to borrow and that chokes off economic growth."

Some analysts are expecting a more aggressive tilt, whether it comes in the policy statement at 2 p.m. ET (1800 GMT), the accompanying economic and interest rate projections, or at Fed Chairman Jerome Powell`s press conference.

The stock market has enjoyed a boom period and is at record levels. But as rates rise, equities face rising competition for investors` funds not only from bonds, but also from cash, which is now the most attractive it has been in about a decade.

Utilities and real estate companies, which tend to be favored in a low-rate environment because of solid dividends, fell 0.23 percent and 0.21 percent, respectively.

At 11:22 a.m. EDT the Dow Jones Industrial Average was up 57.18 points, or 0.22 percent, at 26,549.39, the S&P 500 was up 7.39 points, or 0.25 percent, at 2,922.95 and the Nasdaq Composite was up 27.61 points, or 0.34 percent, at 8,035.08.

Six of the 11 major S&P 500 sectors were higher, led by the health sector`s 0.73 percent gain.

Alexion Pharmaceuticals gained 5.6 percent on a deal to buy privately held Syntimmune in a $1.2 billion deal.

The Nasdaq biotech index rose 1.03 percent, led by Biogen, which advanced 2.4 percent.

Among the laggards were energy stocks, which slipped 0.34 percent as oil prices eased.

Nike fell 2.2 percent after reporting a small rise in quarterly gross margins and left its 2019 forecast unchanged.

Nike was the top loser on the Dow, while IBM was the top gainer, with a 2.3 percent rise after UBS upgraded the stock to "buy".

Advancing issues outnumbered decliners by a 1.03-to-1 ratio on the NYSE, while declining issues outnumbered advancers for a 1.12-to-1 ratio on the Nasdaq.

The S&P index recorded 22 new 52-week highs and 10 new lows, while the Nasdaq recorded 43 new highs and 48 new lows.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)