September 22, 2023

A Breather for a Day, as Health Care Stocks Do the Heavy Lifting

Stocks changed little on Monday, pausing after hitting highs last week, though strength in health care shares helped keep declines in check.

The Dow Jones industrial average ended down 26.81 points, or 0.18 percent, at 15,091.68. The Standard Poor’s 500-stock index was very slightly up, by 0.07 point, at 1,633.77. The Nasdaq composite index was up 2.21 points, or 0.06 percent, at 3,438.79.

The S. P. 500 health care sector climbed 0.7 percent and was the day’s best performer.

Shares of the biopharmaceutical company Theravance jumped 17.9 percent, to $41.20, after the Irish drugmaker Elan agreed to a $1 billion deal to buy 21 percent of the royalties that Theravance receives from GlaxoSmithKline for its respiratory drugs.

Other big health sector gainers included Pfizer, up 2.3 percent, at $29.37; Gilead, up 3.1 percent, at $54.47; and Biogen Idec, up 4.5 percent, at $222.74. The day’s flat close came after a third straight week of gains on the major indexes, with both the Dow and S. P. 500 setting record closing highs last week. The S. P. 500 remains up 14.5 percent for the year so far.

While some analysts argue the long-term trend is still higher, many see momentum for stocks waning in the near term without more positive catalysts. Trading volume has been lighter than average, and volatility has been low in recent days.

“Intraday volatility has essentially been nonexistent. I think it means people are really sitting on the sidelines right now seeing which way it’s going to go,” said Uri Landesman, president of Platinum Partners in New York. He expects the rally to top out in the next two weeks.

The CBOE Volatility index, or VIX, a measure of market expectations and stability, ended down 0.3 percent.

Among the day’s declining issues, the fast-food chain operator Yum Brands fell 2 percent, to $68.92. After the market closed on Friday, Yum posted a steep decline in April sales in China.

Retail sales rose 0.1 percent in April, better than the 0.3 percent drop that had been expected and a return to growth after a decline in March, which helped buoy markets on Monday. Excluding autos, gasoline and building materials, core sales rose 0.5 percent. Retail sales account for about 30 percent of American consumer spending.

Investors are at odds over whether positive economic data can help the market rise further, or whether it will spell the end of the Federal Reserve’s monetary stimulus, which could derail the rally, said Joseph S. Tanious, global market strategist at J.P. Morgan Funds.

Other economic data released on Monday showed business inventories were unchanged in March for a second straight month, versus expectations of a 0.3 percent rise, suggesting that restocking could help second-quarter economic growth.

Earnings have been mostly better than expected. With 90 percent of the S. P. 500 having reported, 67.2 percent of companies topped earnings expectations, according to Thomson Reuters data. Only 46.9 percent have beaten revenue expectations, below the 52 percent average over the last four quarters.

Shares of the Israeli Internet company Perion Network listed in the United States surged 10.6 percent, to $13.94, after it posted quarterly earnings.

Volume was roughly 5.3 billion shares traded on the New York markets, well below the average daily closing volume of about 6.4 billion this year.

The price of the benchmark 10-year Treasury note fell 5/32 to 98 16/32, pushing the yield up to 1.92, from 1.90 on Friday.

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