Wall Street rises with healthcare; oil rallies

By Caroline Valetkevitch

(Reuters) - U.S. stocks jumped on Wednesday, bolstered by gains in healthcare shares after the collapse of the $160 billion merger of Pfizer and Allergan, and by a rise in energy shares.

Minutes from the most recent Federal Reserve meeting suggested the Fed was unlikely to raise interest rates before June.

U.S. drugmaker Pfizer Inc <PFE.N> and Ireland-based Allergan Plc <AGN.N> called off their merger after new U.S. Treasury rules aimed at curbing tax-cutting inversion deals.

News of the merger's breakup boosted the healthcare sector on hopes that the pharmaceutical giants could turn to smaller targets.

The S&P healthcare index <.SPXHC> gained 2.7 percent, while the Nasdaq Biotech Index <.NBI> jumped 6 percent. Shares of Pfizer rose 5 percent to $32.93 and gave the biggest boost to the S&P 500, while Allergan was up 3.5 percent at $244.74.

"I guess the feeling is Pfizer will now look for a new target," said Stephen Massocca, chief investment officer, Wedbush Equity Management LLC in San Francisco. But, he said, "the rally in healthcare is a little counter-intuitive, given the political climate seems to be negative for big pharma right now."

The Dow Jones industrial average <.DJI> was up 112.73 points, or 0.64 percent, to 17,716.05, the S&P 500 <.SPX> had gained 21.49 points, or 1.05 percent, to 2,066.66 and the Nasdaq Composite <.IXIC> had added 76.78 points, or 1.59 percent, to 4,920.72.

Crude oil jumped after data showed an unexpected draw in U.S. stockpiles last week, boosting shares of energy companies. The S&P 500 energy index <.SPNY> rose 2.1 percent.

The day's rally, which included gains in all but two sectors, followed two days of declines in the S&P 500. The index had rallied 13 percent in the previous seven weeks, thanks to stabilizing oil prices and reduced concerns about China's economy.

Investors will soon turn their attention to first-quarter S&P 500 earnings, which are estimated to be down 7.4 percent from a year ago, according to Thomson Reuters data.

Some strategists see further gains in the market if companies are able to handily beat such low earnings expectations.

Federal Reserve policymakers debated whether they might hike rates in April but "a number" of them argued headwinds to growth would probably persist, with many arguing they should be cautious about raising rates.

"I don't think there was anything particularly surprising there. We knew from earlier comments immediately following (the meeting) that there was some dissension," Massocca said.

About 6.9 billion shares changed hands on U.S. exchanges, below the 7.2 billion daily average for the past 20 trading days, according to Thomson Reuters data.

Advancing issues outnumbered declining ones on the NYSE by 2,286 to 734, for a 3.11-to-1 ratio on the upside; on the Nasdaq, 2,003 issues rose and 789 fell for a 2.54-to-1 ratio favoring advancers.

The S&P 500 posted 12 new 52-week highs and no new lows; the Nasdaq recorded 35 new highs and 21 new lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Anil D'Silva and Nick Zieminski)