Stock Market News for March 23, 2010 - Market News

Shares from the healthcare sector led the broader stock market higher Monday, as the contentious healthcare overhaul bill crossed the final hurdle after months of debate and uncertainty.  The 10-year, $940 billion bill will extend insurance to 32 million Americans who are currently without coverage.

Early minutes of trading Monday had investors worried about Greece’s ability to contain its massive budget deficit but those worries were set aside as biotech, healthcare provider and hospital sector stocks saw increased demand.  Stocks of hospital operators jumped on expectations the proposed overhaul would help their businesses and boost revenue.  Shares in Tenet Healthcare (NYSE:THC) rallied 9% and Health Management Associates (NYSE:HMA) surged 11.3%.  Community Health Systems (NYSE:CYH) jumped 6%.  

According to a Citigroup (NYSE:C) analyst, healthcare stocks will receive higher valuations as more investors "rotate" back into the stocks.  A Credit Suisse (NYSE:CS) analyst also said in a note the legislation will prove beneficial for the healthcare sector.

However, insurers had a mixed day due to fears of increased government intervention in the industry's pricing mechanisms. UnitedHealth (NYSE:UNH) shares dropped 3.2%, WellPoint (NYSE:WLP) was off 1.1%, and Humana (NYSE:HUM) shares fell 1.4%.

Meanwhile, Google (NASDAQ:GOOG), which had said in January it would no longer filter its search results in China, said Monday that it is redirecting users of its China search engine to its Hong Kong site in its bid to provide uncensored content.

Of the thirty DJIA components, only seven closed the day in the red as the blue-chip index raced to fresh 18-month highs.  DuPont (NYSE:DD), up 2.5%, American Express (NYSE:AXP), up 1.9%, and Boeing (NYSE:BA), up 1.7%, led the gainers.  Strong semiconductor shares sent the tech-heavy NASDAQ up 0.9% to 2,395, while the broader S&P500 gained 0.5% to 1,166 as 376 of its 500 components ended the day in positive territory.

Gains on the S&P500 were stronger, with only two of its ten industry sectors closing the day in the red; utilities fell 0.5% and oil and gas was down 0.3%.  Those leading the gainers included basic material shares (+1.2%) and consumer services (+1.2%), followed by telecom (+0.8%) and technology (+0.8%), health care (+0.7%) and consumer goods (+0.7%), financials (+0.6%), and industrials (+0.5%).

Notwithstanding Germany’s negative comments Sunday, this morning the Luxembourg PM and head of EU's group of finance ministers said the EU will not "abandon" Greece.  However, without the support of Germany, International Monetary Fund appears to be in the last stop for Athens.

Senator Dodd's finance regulatory reform bill, which was overshadowed yesterday by healthcare bill, is likely to affect banking shares.  According to Fed's Lockhart, the US economy is expected to grow at a solid 3% through 2010, even as he made a strong case for maintaining "extended period" language for holding interest rates low. The US dollar, however, will face a "gradual" deterioration as the dominant currency.

Zacks Investment Research