Wall Street hits 19-month high on healthcare, energy

NEW YORK (Reuters) - U.S. stocks rose to a 19-month high on Friday as Merck eased concerns about the impact of healthcare reform, saying its costs will be relatively low.

Energy shares lifted the broad market after oil rose 1.7 percent to above $85 a barrel on positive economic data. The S&P energy index <.GSPE> gained 2.3 percent, while Chevron was up 1.8 percent at $82.67.

Merck & Co jumped 5 percent to $35.46, making it the top gainer on the Dow. The drugmaker said its costs related to U.S. healthcare reform will be a far smaller percentage of total company sales compared with rival drugmakers.

The news helped the sector rebound after a two-day selloff on fears over the impact from the new healthcare overhaul law. The S&P healthcare index <.GSPA> was up 1.1 percent but is down 2.5 percent for the month.

"The sector has been a dismal performer for almost a month now, so maybe investors are finally beginning to get their hands around all the minutia in the legislation that was passed and what it actually means for companies in the near term," said Jeff Kleintop, chief market strategist at LPL Financial in Boston.

The Dow Jones industrial average <.DJI> gained 69.99 points, or 0.63 percent, to 11,204.28. The Standard & Poor's 500 Index <.SPX> rose 8.61 points, or 0.71 percent, to 1,217.28. The Nasdaq Composite Index <.IXIC> added 11.08 points, or 0.44 percent, to 2,530.15.

For the week, the S&P 500 was up 2.1 percent, the Dow gained 1.7 percent and the Nasdaq rose 2 percent. It was the eighth straight week of gains for the Dow and Nasdaq, while the S&P has gained in seven of the past eight weeks.

On earnings, American Express Co rose 2.7 percent to $48.05 after its results beat expectations and the credit card company struck an optimistic tone about future client spending.

Strong earnings have contributed to the market's gains in recent weeks, with the benchmark S&P 500 up nearly 80 percent from the 12-year lows of March 2009.

But keeping gains in check was jitters over the high debt loads of some euro zone nations after Greece appealed to its European partners and the International Monetary Fund for emergency loans.

Homebuilders <.DJUSHB> were up 3.3 percent after data showed sales of newly built single-family homes rose last month to their highest level in eight months.

The homebuilders index racked up its biggest weekly advance since July 2009, rising 12.8 percent, and is on track for its sixth straight month of gains.

In other data, new orders for durable manufactured goods excluding transportation posted the largest gain in over two years.

"That lends further credence to our belief that the manufacturing portion of the economy has already turned for the positive," said Phil Orlando, chief equity market strategist at Federated Investors in New York.

The Nasdaq's gains were limited by Qualcomm Inc and Amazon.com , which both gave disappointing forecasts earlier this week. Qualcomm fell 2.8 percent to $38.25 and Amazon was down 4.3 percent at $143.63.

Microsoft Corp Inc slipped 1.3 percent to $30.99 after it reported its quarterly profit jumped, but the report failed to meet Wall Street's heightened expectations.

About 9.28 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year's estimated daily average of 9.65 billion.

Advancing stocks slightly outnumbered declining ones on the NYSE by 2,161 to 869, while on the Nasdaq, advancers beat decliners 1,702 to 991.

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