S&P Just Shy of Record on Oil Rally, Biotechs Curb Nasdaq

Surging energy shares pushed the S&P 500 to within 16 points of its record high and the Dow above 18,000 for the first time since April, but tumbling biotech stocks capped gains on the Nasdaq.

The S&P energy index surged 1.86 percent, on track for its best two-day percentage gain since March, as oil prices reached 2016 highs due to supply constraints and a weak dollar.

Chevron rose 2.3 percent and Exxon gained as much as 1.6 percent to a 52-week high of $90.77. The stocks were among the top three giving the biggest boost to the S&P and the Dow.

"Demand for oil seems to be stronger than we anticipated and the price continues to rise, that is something that is positive," said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.

The healthcare index dropped 0.43 percent, dragged down by Biogen and Alexion, both of which reported that their drugs failed in trials. The index is barely in the black year-to-date.

Still, nine of the 10 major S&P sectors were higher a day after Federal Reserve Chair Janet Yellen expressed confidence in the health of the economy and removed a reference to when the central bank would raise interest rates.

"It feels like markets want to move higher even though there is no real reason for us to pay more. Its a head scratcher," Forrest said.

At 12:33 p.m. ET (1633 GMT) the Dow Jones Industrial Average was up 76.33 points, or 0.43 percent, at 17,996.66, easing after hitting a session high of 18,003.23.

The S&P 500 was up 8.83 points, or 0.42 percent, at 2,118.24, slightly off its session high. The index hit a record high of 2,134.72 in May last year.

The Nasdaq Composite eked out a gain of 6.46 points, or 0.13 percent, at 4,975.18. The biotech index fell 2.3 percent, set for its steepest one-day percentage drop in a month.

Biogen tumbled 12 percent to $255.33, and was the biggest drag on the Nasdaq and the S&P, after its multiple sclerosis drug failed in a mid-stage study.

Alexion dropped 10.7 percent to $138.18 after its drug failed a trial, while Valeant slumped 13 percent to $25.12 after the drugmaker cut its full-year forecast.

One of the few bright spots among biotechs was Sarepta , which surged 25 percent on hopes that its DMD drug could yet win U.S. approval.

Advancing issues outnumbered decliners on the NYSE by 2,003 to 925. On the Nasdaq, 1,552 issues rose and 1,157.

The S&P 500 index showed 37 new 52-week highs and one new low, while the Nasdaq recorded 69 new highs and 17 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)