Tech boosts S&P, Nasdaq; healthcare weighs on Dow

(Reuters) – U.S. stocks edged higher on Monday boosted by technology shares ahead of Alphabet’s results after the bell, but declines in healthcare and energy stocks kept gains in check.

A more than 2 percent rise from marquee companies such as Alphabet Inc, Apple Inc and Microsoft Corp boosted the Nasdaq. The technology sector rose 1.13 percent.

Google-parent’s quarterly report will round up a mixed bag of results from other FAANG stocks. Apple and Facebook Inc posted better-than-expected quarterly results last week, while Netflix Inc and Amazon.com Inc gave downbeat current-quarter forecasts.

The energy sector fell 0.88 percent, the most among the seven major S&P sectors trading in the red, as oil prices fell more than 1 percent.

At current levels, the S&P 500 was about 8 percent away from its Sept. 20 record close and was helped recently by signs of progress in U.S.-China trade talks and as the Federal Reserve pledged to be patient with further interest rate hikes.

A stronger-than-expected jobs report on Friday underscored the strength in the domestic economy though concerns remained that a slowdown in the rest of the world could hurt U.S. earnings, with warnings from bellwethers including Caterpillar Inc.

“We got through last week with the employment report and the Fed. I think the focus is more firmly on earnings this week,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.

“As the fourth quarter numbers are coming in, I think there is a concern around slowdown in the first quarter. Certainly the comparisons are going to be a lot tougher.”

Nearly half of the S&P 500 companies that have reported fourth-quarter earnings so far, 71.4 percent beat analysts’ estimates, according to IBES data from Refinitiv.

Since the earnings season kicked off three weeks ago, analysts’ estimates for fourth-quarter profit growth have risen to 15.4 percent from 14.3 percent, but expectations for the first quarter of 2019 have dropped to 0.5 percent from 3.4 percent.

At 11:10 a.m. ET the Dow Jones Industrial Average was down 40.11 points, or 0.16 percent, at 25,023.78, the S&P 500 was up 1.49 points, or 0.06 percent, at 2,708.02 and the Nasdaq Composite was up 53.45 points, or 0.74 percent, at 7,317.32.

Allergan Plc dropped 3.37 percent after the FDA approved Evolus Inc’s cheaper version of blockbuster Botox. Evolus jumped 20 percent.

Losses in UnitedHealth Group Inc and Johnson & Johnson pulled the healthcare sector 0.98 percent lower and weighed on the blue-chip Dow and S&P 500.

In a bright spot, Ultimate Software Group Inc surged 19.51 percent after the HR software provider agreed to be bought by an investor group led by Hellman & Friedman in a $11 billion deal.

Advancing issues outnumbered decliners for a 1.03-to-1 ratio on the NYSE and a 1.48-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and no new lows, while the Nasdaq recorded 44 new highs and 10 new lows.