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Wall St rises as Syria fears ease; healthcare stocks jump

March retail sales rise more than expected.

US stocks rose on Monday on waning fears that the weekend’s US-led missile attack on Syria would escalate into a broader conflict and a rise in healthcare shares after Merck’s positive update on a cancer drug.

Saturday’s strikes marked the biggest intervention by Western countries against Syrian President Bashar al-Assad and his ally Russia, which is facing further economic sanctions over its role in the conflict.

“The action was well-received … and that’s giving a chance for investors to focus on macro news and earnings,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“It’s not going to be a negative unless it turns into a bigger conflict. It’s going to be a day where the market is going to attempt to move a bit higher.”

Healthcare stocks rose 0.76% on the S&P 500, driven by Merck’s 3.2% rise following positive data on its immunotherapy, Keytruda.

Shares of Bank of America edged lower despite the lender reporting a better-than-expected increase in quarterly profit.

Analysts are expecting the S&P 500 companies to record an 18.6% rise in profit, their strongest earnings growth in seven years, according to Thomson Reuters I/B/E/S.

However, many traders say that reactions to results could be muted as market participants have already priced in gains from corporate tax cuts, reflected in the stock market’s strong rally in 2017 and early 2018.

At 9:53 a.m. ET, the Dow Jones Industrial Average was up 0.59% at 24 502.89. The S&P 500 gained 0.41% to 2,667.22 and the Nasdaq Composite 0.19% higher at 7 120.19.

Waning fears of a broader conflict in Syria pushed short-dated US Treasury yields to their highest level in almost a decade, while crude oil prices eased due to a rise in US drilling activity.

“We’re seeing a little bit of an uptick in yields and pullback in oil, and those are likely to constrain any strong reaction to earnings and macro news,” said Cardillo.

Data on Monday showed US retail sales increased more than expected in March, rising after three straight monthly declines, as households boosted purchases of motor vehicles and other big-ticket items.

Shares of optical component makers Acacia Communications , Oclaro, Lumentum Holdings Inc and Finisar Corp were down between 4.2% and 33%.

Reuters reported that the US Department of Commerce was banning American companies from selling components to Chinese telecom equipment maker ZTE Corp for seven years for violating the terms of a sanctions violation case.

Advancing issues outnumbered decliners on the NYSE for a 2.22-to-1 ratio. On the Nasdaq, a 1.35-to-1 ratio favoured advancers. 

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