U.S. stocks were near session highs in the latter stages of trading on Wednesday, led by healthcare stocks after the S&P 500 successfully tested a key support level following three sessions of declines.
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The benchmark S&P index hit a session low of 1,978.63, just above the 50-day moving average support level of around 1,976, before turning higher. The index had fallen below its 14-day moving average, an indicator of short-term momentum, on Monday for the first time since Sept. 15.
Indexes added to gains and hit session highs after Chicago Federal Reserve Bank President Charles Evans said the central bank should be "exceptionally patient" in removing monetary policy accommodation at a Peterson Institute conference on labor market slack.
"We got a little Fed speaking going on it looks like, we had Evans saying let’s not be too quick to raise rates, the market loves that," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
"If you look at the second leg of the rally, (Evans) is definitely responsible for the second leg."
The Dow Jones industrial average <.DJI> was rising 121.17 points, or 0.71 percent, to 17,177.04, the S&P 500 <.SPX> was gaining 11.45 points, or 0.58 percent, to 1,994.22 and the Nasdaq Composite <.IXIC> was adding 36.10 points, or 0.8 percent, to 4,544.79.
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Healthcare <.SPXHC> was the best performing of the 10 major S&P sectors, up 1.5 percent, as Gilead Sciences <GILD.O> rose 2.7 percent to $108.24 after trial results for the company's HIV treatment.
Bed, Bath & Beyond <BBBY.O> shares were up 7.2 percent at $67.20 as the best performer on the S&P 500 after the home furnishings retailer reported better-than-expected quarterly revenue, lifting the S&P retail index <.SPXRT> 1.3 percent.
New home sales jumped 18 percent to a seasonally adjusted annual rate of 504,000 units in August, well above the 430,000 units forecast and the highest level since May 2008.
Despite the upbeat data, housing stocks <.HGX> were little changed to add just 0.1 percent, as gains were curbed by a 6 percent drop in KB Home <KBH.N> to $15.95 after its third-quarter earnings and revenue fell short of estimates.
The largest percentage gainer on the New York Stock Exchange was Green Dot <GDOT.N>, which surged 21.79 percent after launching its checking account product at WalMart <WMT.N>, while the largest percentage decliner was GrafTech <GTI.N>, down 30.98 percent.
Advancing issues were outnumbering declining ones on the NYSE by 1,691 to 1,291, for a 1.31-to-1 ratio on the upside; on the Nasdaq, 1,670 issues were rising and 974 falling for a 1.71-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 10 new 52-week highs and 11 new lows; the Nasdaq Composite was recording 18 new highs and 102 new lows.