Wall Street buoyed by healthcare with Fed on deck

By Lewis Krauskopf

(Reuters) - Wall Street edged higher on Tuesday, helped by gains in healthcare shares, as investors awaited the outcome on Wednesday from monetary policy meetings in the United States and Japan.

Though the Federal Reserve is not expected to raise rates, the U.S. central bank's statement is eagerly anticipated for any clues about whether it will hike in the coming months.

The Bank of Japan is expected to further ease its ultra-loose policies, according to a Reuters poll of economists.

"Not many think the Fed is going to hike tomorrow, but whether they change the language to get a little more hawkish, there's been conversation around that," said Walter Todd, chief investment officer at Greenwood Capital in Greenwood, South Carolina.

 

"The Bank of Japan is a whole other issue unto itself...Given the level of uncertainty around those two meetings, I just think people are kind of biding their time."

The Dow Jones industrial average <.DJI> rose 47.32 points, or 0.26 percent, to 18,167.49, the S&P 500 <.SPX> gained 5.31 points, or 0.25 percent, to 2,144.43 and the Nasdaq Composite <.IXIC> added 13.97 points, or 0.27 percent, to 5,249.00.

Traders are projecting an 18 percent chance that the Fed will raise rates on Wednesday, but the probability rises to 60 percent for a hike at its December meeting, according to the CME FedWatch website.

A report on Tuesday showed U.S. housing starts fell more than expected in August.

"I think (housing data) helps solidify the position for the Fed to hold rates," said Paul Springmeyer, investment managing director at the Private Client Group, U.S. Bank in Minneapolis, Minnesota.

The healthcare sector <.SPXHC> was the best performing major S&P sector, rising 0.6 percent.

Allergan said it would pay up to $1.7 billion to buy Tobira Therapeutics , which is developing therapies for NASH, an incurable fatty liver disease. Tobira shares soared more than 700 percent, while Allergan shares fell 2.4 percent.

Shares of Gilead Sciences , which is also developing drugs for NASH, rose 3.5 percent and were among the biggest boosts to the S&P and the Nasdaq.

Wells Fargo shares rose 1.9 percent after the bank's chief executive weathered criticism as he testified before a U.S. Senate panel.

The S&P energy sector <.SPNY> was the worst performing group, falling 0.2 percent. Exxon fell 0.7 percent. A Wall Street Journal report said the U.S. Securities and Exchange Commission is investigating how the oil major valued its assets in the wake of the plunge in oil prices.

Advancing issues outnumbered declining ones on the NYSE by a 1.04-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favoured advancers.

The S&P 500 posted 3 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 70 new highs and 30 new lows.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Don Sebastian and Chizu Nomiyama)