Healthcare slump weighs on Wall St; U.S. yields rise

By Sam Forgione

NEW YORK (Reuters) - U.S. Treasury yields rose on Tuesday on signs of improvement in the U.S. housing market, while U.S. shares edged lower after a slump in healthcare and biotech stocks.

The S&P healthcare sector <.SPXHC> ended 1.5 percent lower, dragged down by Allergan and Pfizer , while a drop in IBM shares also offset gains in companies that reported strong quarterly results such as Verizon and United Technologies .

European shares ended lower, with traders citing profit-taking in the absence of anything to justify further gains. Major energy stocks such as BP and Total were among the decliners.

 

Earnings for S&P 500 companies are expected to have fallen about 4 percent in the third quarter, while revenue is expected to have declined 3.8 percent, according to Thomson Reuters data.

"You're seeing weakness in momentum names in general. Obviously the healthcare names are under pressure again, especially pharma companies," said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Benchmark 10-year Treasury yields > hit 2.079 percent, their highest in over a week.

Commerce Department data showed U.S. housing starts increased 6.5 percent in September to a seasonally-adjusted annual pace of 1.21 million units. That beat expectations for 1.15 million units, according to a Reuters poll of economists.

MSCI's all-country world equity index <.MIWD00000PUS>, which tracks shares in 45 markets, was last down 0.2 percent at 405.72. Europe's broad FTSEurofirst 300 index <.FTEU3> closed down 0.45 percent at 1,431.95.

The Dow Jones industrial average <.DJI> ended 0.08 percent lower, at 17,217.11. The S&P 500 <.SPX> closed down 0.14 percent, at 2,030.77. The Nasdaq Composite <.IXIC> ended 0.5 percent lower, at 4,880.97.

U.S. crude prices eased slightly, failing to hold onto marginal gains earlier in the session, as market participants waited for direction from two key U.S. oil storage reports. Industry group the American Petroleum Institute (API) will report stockpiles data later on Tuesday, and EIA will release oil inventory data on Wednesday.

Brent crude settled up 10 cents, or 0.2 percent, at $48.71 a barrel. U.S. crude settled down 34 cents, or 0.7 percent, at $45.55 per barrel.

The euro inched higher against the dollar after falling for three straight sessions, bolstered in part by quarterly lending data from the ECB that showed euro zone banks loosened their lending standards more than expected over the last few months despite recent global market volatility.

That lessened the need for the ECB to ramp up its 1 trillion euro asset purchase programme, this week at least.

"What actually changed the euro was that banks have a lending survey and for October it was very positive - only pointed out positives, and so there's no need for the European Central Bank to increase quantitative easing," said Juan Perez, foreign currency trader, at Tempus Consulting in Washington.

The euro was last up 0.08 percent against the dollar at $1.13385 >. The dollar index, which measures the greenback against a basket of six major currencies, was last down slightly at 94.893 <.DXY>.

(Additional reporting by Marc Jones and Sudip Kar-Gupta in London, Michael Connor, Gertrude Chavez-Dreyfuss and Caroline Valetkevitch in New York; Editing by Nick Zieminski)