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* The US service sector is 16 months high in July
* Walt Disney hits five-month high
* CVS, Humana, Regeneron deliver winning teams
* Index up: Dow 0.94%, S&P 0.58%, Nasdaq 0.36% (Updates open)
By Medha Singh
August 5 (Reuters) – US equities rose on Wednesday as data showing an expansion in the service industry last month boosted optimism following Disney’s surprising quarterly results and positive results from several healthcare companies.
A reading of the ISM’s non-manufacturing activity index increased to 58.1 last month, the highest since March 2019, from 57.1 in June.
Walt Disney Co.’s shares jumped 8.9% to reach more than a five-month high because the revenue cuts for its parks and media networks were not as bad as feared.
“Disney’s moves helped drive market progress. In general, revenues have been better than expected,” said Sam Stovall, chief investment officer at CFRA Research in New York.
Drugstore operator and health insurance company CVS Health Corp topped quarterly earnings estimates and raised its full-year forecast, while Humana Inc and pharmaceutical maker Regeneron Pharmaceuticals Inc also released forecast results.
Johnson & Johnson rose about 0.7% after the US government paid more than $ 1 billion for 100 million doses of its screening coronavirus vaccine.
Corporate performance that is better than feared and a sharp increase in shares in heavy technology companies have driven a stimulus-driven rally in Wall Street’s main index, giving the S&P 500 within 2.5% of its record high hit in February.
Earlier in the day, the ADP National Employment Report showed that private wages rose by 167,000 in July, well below economists’ expectations of a 1.5 million increase. The ADP report is considered a precursor to the monthly job report on Friday.
Investors have been worried about signs that US economic activity is rising in the middle of an increase in COVID-19 infections in parts of the country, which strengthens the case for more financial support.
Negotiators in the White House on Tuesday promised to work “around the clock” with the Congress Democrats to try to reach an agreement on coronavirus relief packages by the end of this week.
Financial, industrial and material stocks, which track economic growth, outperformed the major S&P sectors.
The energy sector rose the most when oil prices hit their highest level since the beginning of March.
At 10:15 AM ET, the Dow Jones Industrial Average rose 252.77 points, or 0.94%, to 27,081.24, the S&P 500 rose 19.19 points, or 0.58%, to 3,325.70. The Nasdaq Composite increased 39.58 points, or 0.36%, to 10,980.74.
Electric truck maker Nikola Corporation fell 10.1% after reporting a major quarterly loss in its initial results as a listed company.
Promotional issues outperformed the reduction by a 2.57-to-1 ratio on the NYSE and by a 1.80-to-1 ratio on the Nasdaq.
The S&P index recorded 40 new 52-week highs and no new lows, while the Nasdaq recorded 168 new highs and seven new lows. (Reporting by Medha Singh and Ambar Warrick in Bengaluru; editing by Uttaresh.V and Anil D’Silva)