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Nasdaq posts back-to-back gains as health care jumps 1%

  • Health care outperformed Thursday, with the XLV ETF hitting a record high.
  • The Dow, S&P, and Nasdaq traded in a narrow range for most of the session before closing around the flatline.
  • Crude prices rebounded after a sharp two-day sell-off, with U.S. oil futures climbing half a percent.

U.S. stocks closed mixed on Thursday, with the health care sector posting strong gains.

The Dow Jones industrial average closed about 10 points lower, with Goldman Sachs contributing the most losses and UnitedHealth the most gains.

The S&P 500 ended just below breakeven, with health care rising more than 1 percent to lead advancers. The Health Care Select Sector ETF (XLV) hit an intraday record earlier in the session. However, financials dropped 0.6 percent as the big banks got ready for the release of their latest stress test results.

The Nasdaq composite rose just 0.04 percent but notched a two-day winning streak on the back of health care's performance.

Health care stocks have been on a tear this week as investors braced for the unveiling of the Senate's health care bill, with aims at repealing and replacing Obamacare.

The bill would continue to offer reimbursements to health insurance companies for subsidies for at least two years. It would also do away with current Obamacare taxes and would phase out Medicaid's expansion program. The Senate is expected to vote on the bill next week.

"At this point, it looks like [the vote] will have the same intrigue as the house vote," said Bill Northey, chief investment officer at the Private Client Group at U.S. Bank. He also said health care stocks may be benefiting from a sector rotation from technology into other spaces.

Traders work on the floor of the New York Stock Exchange.
Brendan McDermid | Reuters
Traders work on the floor of the New York Stock Exchange.

Wall Street also kept an eye crude prices as they tried to bounce back from back-to-back sell-offs.

Crude futures for August delivery climbed 0.49 percent to settle at $42.74 a barrel. On Wednesday, oil hit its lowest level since August as investors remained concerned about a supply glut in the market. The commodity also fell more than 2 percent during Tuesday's session.

"We're seeing a number of indications of a softening economy," said Bruce McCain, chief investment strategist at Key Private Bank. "We're growing but it seems like we're slipping back into the slow-growth trend that's been in place for most of the recovery."

The pullback in oil prices pressured energy stocks. The S&P energy sector had dropped 3.5 percent for the week entering Thursday's session.

Still, the broader market has stood its ground, with the S&P and Dow up marginally for the week, while the Nasdaq was had risen 1.34 percent in the same period.

"Oil is becoming less important since it only makes up about 6 percent of the S&P 500", said Maris Ogg, president at Tower Bridge Advisors. "In the overall context of things, we know that oil is the new coal and gas is the new oil. Crude just isn't a commodity in short supply."

Despite energy's recent pullback, the overall indexes remain near record highs. Gary Bradshaw, portfolio manager at Hodges Capital, said he expects stocks to keep climbing higher. "Corporations are doing well and we have a backdrop of low corporate rates," he said.

In corporate news, shares of American Airlines gained about 1 percent after the airline disclosed Qatar Airways had approached the firm about taking a large stake in the company. Other airline stocks like Delta Air Lines and Southwest followed American shares higher.

Symbol
Name
Price
 
Change
%Change
DJIA
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S&P 500
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NASDAQ
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The Dow Jones industrial average fell 12.74 points, or 0.06 percent, to close at 21,397.29, with Goldman Sachs leading decliners and Merck the best performer.

The S&P 500 slipped 1.11 points, or 0.05 percent, to end at 2,434.50, with consumer staples leading seven sectors lower and health care outperforming.

The Nasdaq rose 2.73 points, or 0.04 percent, to close at 6,236.69.

About four stocks rose for every three decliners at the New York Stock Exchange, with an exchange volume of 852.66 million and a composite volume of 3.434 billion at the close.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 10.5.

On tap this week:

Friday

Earnings: Blackberry, Finish Line

9:45 a.m. Manufacturing PMI

10:00 a.m. New home sales

10:15 a.m. St. Louis Fed President James Bullard

12:40 p.m. Cleveland Fed President Loretta Mester

2:15 p.m. Fed Gov. Powell