Wall Street slips on healthcare, but Apple soars

NEW YORK (Reuters) - U.S. stocks slipped on Wednesday as disappointing outlooks from healthcare companies, including Abbott Laboratories , overshadowed stronger-than-expected earnings from APPLE (AAPL.NQ)Inc and Morgan Stanley .

The S&P 500 crisscrossed the key support level of 1,200, which if violated may unleash more downside pressure after the benchmark index breached a key uptrend line from early February late last week. It is still up 77 percent from the March 2009 bottom.

The S&P health care index <.GSPA> fell nearly 2 percent after Abbott cut its 2010 profit forecast, sending its shares down 2.8 percent to $51.58 on the New York Stock Exchange.

Gilead Sciences Inc tumbled nearly 10 percent to $40.67 a day after the company's quarterly sales for its core HIV drugs missed analyst's estimates, and the company cut its full-year forecast. Both Abbott and Gilead cited the impact of costs from U.S. healthcare reform in their outlooks.

The two represented a bit of a setback in an otherwise upbeat earnings season so far.

"We still have a lot of more news on how healthcare stocks are going to be affected. I think slowly people will figure out winners and losers as the law gets implemented," said Giri Cherukuri, head trader at OakBrook Investments Lisle, Illinois. "I think with all the good earnings we've had lately, you're getting a bit of profit-taking."

The Dow Jones industrial average <.DJI> shed 20.55 points, or 0.18 percent, to 11,096.51. The Standard & Poor's 500 Index <.SPX> dipped 4.72 points, or 0.39 percent, to 1,202.45. The Nasdaq Composite Index <.IXIC> lost 1.86 points, or 0.07 percent, to 2,498.45.

On the positive side, Morgan Stanley shares climbed 4 percent to $31.66 after posting a stronger-than-expected profit on strong fixed income trading. [ID:nN20196867]. The KBW Banks index <.BKX> edged up 0.5 percent.

Apple Inc. shares advanced 6 percent to $258.94, a day after the technology bellwether posted quarterly results that eclipsed expectations on record iPhone sales and forecast strong revenue growth.

Earlier in the session Apple hit an all-time intraday high of $260.25.

But healthcare shares weighed on the market, and Gilead Sciences was the top drag on Nasdaq. Some analysts had downgraded the stock based on uncertainty about implementation of the new healthcare reform law in 2010 and 2011.

Drugmaker Merck & Co fell more than 3 percent to $34.85 and was the Dow's biggest drag.

Worries about Greece's debt woes lingered, with Greek borrowing costs surging to a 12-year high on Tuesday. Talks on a potential aid deal involving the EU and IMF began on Wednesday.

(Reporting by Ellis Mnyandu; Editing by Kenneth Barry)

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