Wall Street rallies, led by biotechs; retailers weak
Retail stocks capped the market's gains after Commerce Department data showed that US retail sales unexpectedly stalled in July, marking the weakest report since January.
Macy's Inc quarterly earnings missed analysts' estimates and the department store operator slashed its full-year same-store sales forecast, driving the stock down 5.5 percent to $56.47.
Other major retailers, including Wal-Mart Stores Inc , are expected to report results on Thursday. Wal-Mart shares slipped 0.3 percent to $74.03.
Although the weak retail data pointed to some loss of momentum in the economy, the July reading could give the Federal Reserve more support to move slowly on raising interest rates, a situation that favours investors in equities.
All 10 S&P primary sector indexes gained, even as some heavyweights' stocks plunged on missed earnings and downgraded revenue forecasts.
Biotech shares surged, with the Nasdaq Biotech Index climbing 2.1 percent in sync with a rally in the stocks of InterMune Inc and Jazz Pharmaceuticals PLC.
The Dow Jones Transportation Average gained 0.7 percent.
The Dow Jones industrial average rose 91.13 points, or 0.55 percent, to close at 16,651.67. The S&P 500 was up 12.97 points, or 0.67 percent, to close at 1,946.72. The Nasdaq Composite added 44.88 points, or 1.02 percent, to end at 4,434.13.
During the regular session, an S&P index of healthcare stocks jumped 1.2 percent and led the S&P 500 higher. Vertex Pharmaceuticals shares, the biggest gainer in the S&P 500 healthcare sector, shot up 3.9 percent to $88.75.
About 4.7 billion shares traded on all US platforms, according to BATS exchange data, compared with the five-day average of 5.7 billion.
European stock markets recovered ground, lifted by gains in the shares of utility E.ON and insurer Swiss Life after forecast-beating results.
However, economic sanctions over Ukraine and the broader risks posed by conflict between Kiev's forces and pro-Russian separatists limited the market's rebound from a recent sharp slide.
Investors are also worried that Europe's economic recovery remains muted. Ukraine tensions were assigned some of the blame for data that showed an unexpected contraction in euro zone industrial production in June.
The pan-European FTSEurofirst 300 index, which had hit a 6-1/2 year high in late June but then fell back some 5 percent due to the Ukraine crisis, closed up by 0.4 percent at 1,325.46 points.
A 4.8 percent rise at E.ON gave one of the biggest lifts to the FTSEurofirst 300.
Even though E.ON posted a drop in interim profits, with a warning the Ukraine crisis would hurt its Russian earnings, its shares rose as the results beat analysts' forecasts.
Swiss Life also surged 7.1 percent after Switzerland's largest dedicated life insurer beat expectations with a slight rise in first-half net income, buoyed by a strong performance in its home market.
September Brent crude futures, which expire on Thursday, fell as low as $102.37, the weakest for a front-month price since July 1, 2013, before bouncing 1 percent higher on the day to $104.08 as turmoil in Iraq and Libya kept concerns about potential supply disruptions in focus.
The outlook on prices, however, continues to be bearish.
OPEC output rose to a five-month high of 30.44 million barrels per day in July as increased production from Saudi Arabia and Libya more than offset declines in Iraq, Iran and Nigeria.
US crude was down 2 cents at $97.35.