U.S. stocks rose on Thursday, boosted by a strong reading on quarterly economic growth and by another round of upbeat earnings reports including Visa, which accounted for nearly 140 points in the Dow industrials.
Despite the bullish data and the Federal Reserve's Wednesday statement indicating the economy is strengthening, gains on the S&P 500 were led by healthcare and utilities, traditionally defensive sectors.
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Analysts cited mutual funds purchases of the best performing stocks for the run in those sectors, as funds close their books for the year at the end of this month. Healthcare <.SPXHC> and utilities <.SPLRCU> are both up nearly 20 percent year-to-date.
"End of year for mutual funds is most likely going to be selling losers and continue to buy winners," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
Healthcare also got a boost by Bristol-Myers Squibb <BMY.N>, up 8.9 percent to $58.98 after results from an experimental clinical trial on a lung cancer drug were encouraging.
Gross domestic product grew at a 3.5 percent annual rate in the third quarter, beating expectations. A separate report showed first-time applications for unemployment benefits rose marginally last week, but a measure of underlying trends hit its lowest level since May 2000 in a show of labor market strength.
Adding to support from earnings and economic data, market participants cited a report from the Nikkei newspaper that confirmed expectations that Japan's Government Pension Investment Fund, considered a bellwether for other Japanese institutional investors, will cut holdings of Japanese bonds and add to local and foreign equities.
The iShares MSCI Japan ETF <EWJ.P> gained 0.8 percent and U.S. dollar denominated Nikkei futures <NKc1> gained 0.7 percent.
"The more you hear demand for equities picking up globally, that is going to be a net positive for U.S. equities," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
"If you look globally, growth is here in the United States," she said.
The Dow Jones industrial average <.DJI> rose 221.11 points, or 1.3 percent, to 17,195.42, the S&P 500 <.SPX> gained 12.35 points, or 0.62 percent, to 1,994.65 and the Nasdaq Composite <.IXIC> added 16.91 points, or 0.37 percent, to 4,566.14.
Visa <V.N> jumped 10.2 percent to $236.65, the biggest boost to both the Dow and S&P 500, a day after it reported adjusted earnings that topped expectations, and said the mobile payment industry would be "a great driver" for business.
MasterCard <MA.N> also posted a better-than-expected profit, while revenue was up almost 13 percent. Its shares added 9.4 percent to $83.13.
So far this reporting season, 75.5 percent of S&P 500 companies have exceeded profit expectations, according to Thomson Reuters data, above the long-term average of 63 percent.
SHORT OUTAGE ON NYSE QUOTES
The New York Stock Exchange said it had experienced an outage in publishing and receiving trades and quotes on two of its exchanges, the latest incident to hit data processors key to trading.
Within 10 minutes of the initial notification, the exchange released a statement that said the issue, which affected the NYSE and NYSE MKT exchanges, had been resolved. Traders noted that a sudden, huge surge in equity futures volume occurred concurrently with the problems, but could not say whether it was related.
Despite the outage, trading in NYSE-listed securities appeared to be relatively unaffected, with steady volume still seen in those issues.
Overall volume on U.S. exchanges was 6.9 billion, below the daily average so far this month of 7.8 billion, according to BATS Global Markets data.
Advancing issues outnumbered declining ones on the NYSE by 1,948 to 1,116, for a 1.75-to-1 ratio on the upside; on the Nasdaq, 1,689 issues rose and 975 fell for a 1.73-to-1 ratio.
The benchmark S&P 500 index posted 81 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 125 new highs and 50 new lows.
(Reporting by Rodrigo Campos, additional reporting by Chuck Mikolajczak and Caroline Valetkevitch; Editing by Nick Zieminski)