By Corrie Driebusch And Saumya Vaishampayan
U.S. stocks advanced Monday, lifted by gains in health-care and
financial shares as well as optimism that Greece will eventually
reach a bailout deal with its creditors.
The Dow Jones Industrial Average rose 112 points, or 0.6%, to
18128. The S&P 500 index added 14 points, or 0.7%, to 2124 and
the Nasdaq Composite Index gained 34 points, or 0.7%, to 5151,
after earlier reaching a new intraday high.
The health-care sector gained broadly Monday, with health-care
companies in the S&P 500 up 1% in recent trading. The sector
rose as a rash of merger and acquisition news broke over the
weekend.
Anthem Inc. took its bid to buy Cigna Corp. public, though Cigna
on Sunday said it rejected the offer. Cigna and Aetna Inc. are at
the same time looking into acquiring Humana Inc., which has
privately put itself up for sale. Meanwhile, UnitedHealth Group
Inc. recently made a takeover approach to Aetna.
Anthem shares gained 4.3%. Cigna rose 5.6% and Aetna climbed
4.6%.
Monday's move in the sector came as health-care companies in the
S&P 500 have risen 26% in the past year through Friday's close,
the largest increase among S&P 500 sectors. While strong
earnings and revenue have driven the gains, recent buyout deals
have also boosted shares.
The pick-up in merger and acquisition activity, as well as a
rise in the yield of the 10-year Treasury note, lifted shares of
financial companies, traders said.
"The M&A shows capital markets are healthy and people are
willing to make moves," said RJ Grant, associate director of equity
trading at Keefe, Bruyette & Woods. He added that this
sentiment is helping banks and other firms that advise on these
deals and make fees on them.
The continued tick-up in yields also boosted shares of banks. On
Monday, the 10-year yield rose to 2.344% from 2.268% on Friday.
Rising interest rates are expected to boost banks' earnings by
allowing them to widen the spread between the interest they charge
on loans and what they pay on deposits.
Shares of financial companies in the S&P 500 rose 0.9% in
recent trading.
Separately, news out of Greece lifted stocks around the globe.
The Wall Street Journal reported that the Greek government's latest
plan makes a potentially major concession on cutting deficits in
its pension system. The plan was formally submitted to creditors
Monday and could be a big step toward ending a monthslong deadlock
that has spurred talk of a potential Greek exit from the eurozone.
Still, eurozone leaders cautioned that an immediate breakthrough
was unlikely.
European stocks rallied, buoyed by optimism that Greece will
eventually reach a deal with its creditors. Germany's DAX and
France's CAC-40 both jumped 3.8%. Greek stocks surged 9%.
Asian stocks also rose, with Hong Kong's Hang Seng Index adding
1.2%.
The magnitude of market moves in Europe and the U.S. "speak to
what the overhang has been over the last month or so as the
negotiations continued to deteriorate," said Art Hogan, chief
market strategist at brokerage firm Wunderlich Securities. "The
contemplation of a messy Greek default and exit from the eurozone
and fears of contagion into peripheral countries...may well get
moved aside," he said.
Concerns about Greece's financial situation, as well as worries
about U.S. corporate earnings, elevated stock valuations and an
eventual increase in interest rates have all collided to keep a lid
on stock gains this year. The S&P 500 has added 2.5% in 2015,
through Friday's close, less than the index's 6% gain in 2014
through June 19.
Sales of previously owned homes increased 5.1% last month from
April to 5.35 million, according to the National Association of
Realtors. Sales were expected to increase 4.2% in May to an annual
rate of 5.25 million, according to economists surveyed by The Wall
Street Journal.
In commodity markets, gold futures slipped 1.4% to $1184.90 an
ounce. Crude-oil futures fell 0.5% to $59.63 a barrel.
In corporate news, natural-gas pipeline giant Williams Cos. has
rejected an unsolicited buyout offer from Energy Transfer Equity
L.P. worth $48 billion but is open to other offers. Williams Cos.
shares jumped 24%, while those of Energy Transfer Equity slipped
3.6%.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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