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* Biden sweeps South in Democratic presidential primaries
* Health insurers surge as Sanders suffers setback
* Indexes up: Dow 2.90%, S&P 2.63%, Nasdaq 2.51%
(Updates to early afternoon)
By Medha Singh and Sanjana Shivdas
March 4 (Reuters) - Wall Street rose more than 2.5% on
Wednesday, led by healthcare stocks, after Joe Biden overtook
Bernie Sanders to become the new front-runner in the race for
the Democratic presidential nomination.
Biden's storming sweep of Super Tuesday Democratic primaries
mainly in southern states provided some welcome relief to
investors who have dumped stocks in one of the worst weeks for
financial markets in recent history.
The S&P 500 .SPX and the Dow .DJI recouped more than
half of a nearly 3% slide in the previous session, which was
triggered by an emergency interest rate cut by the Federal
Reserve that amplified concerns over the impact of the
coronavirus outbreak.
However, all three main U.S. indexes remained firmly in
correction territory, down nearly 10% from their record highs,
with several analysts saying there was more trouble ahead as the
outbreak continues to worsen in countries outside China.
Biden's triumph lifted health insurers, which have suffered
for months as self-described socialist Sanders and his "Medicare
for All" proposal, which would eliminate private health
insurance, gained credence.
UnitedHealth Group Inc UNH.N , Centene Corp CNC.N , Humana
Inc HUM.N and Cigna Corp CI.N surged more than 10%. The
broader healthcare .SPXHC index jumped 4.5%, the most among
major S&P sectors.
"Today is a Joe Biden relief rally and an awareness that
Bernie Sanders may not be the potential threat to the U.S.
economy and markets," said Eric Schiffer, chief executive
officer of the private equity firm, the Patriarch Organization.
At 1:11 p.m. ET, the Dow Jones Industrial Average .DJI was
up 752.75 points, or 2.90%, at 26,670.16 and the S&P 500 .SPX
was up 78.87 points, or 2.63%, at 3,082.24. The Nasdaq Composite
.IXIC was up 217.60 points, or 2.51%, at 8,901.69.
Fears of a global recession and its impact on U.S. corporate
earnings this year have knocked $3.1 trillion off the value of
major U.S. companies in the past 10 days.
But Thomas Hayes, managing member at Great Hill Capital LLC
in New York, said the Fed's cuts would help extend the
decade-long economic expansion.
"It will take 4-6 months to filter into the economy and we
are setting up for a very strong back half of the year," he
said.
Traders have fully priced in another 50 basis point interest
rate cut by the Fed in its March 17-18 policy meeting, according
to CME group's Fed Watch tool.
Rate-sensitive bank .SPXBK stocks were again weak, down
0.4% with the benchmark Treasury 10-year yields holding below 1%
on hopes of another rate cut soon.
Dividend-paying utilities .SPLRCU , real estate .SPLRCR
and consumer staples .SPLRCS climbed more than 2.7% each.
"Things are going to get a lot worse before they get
better," said Schiffer, adding the coronavirus is the single
biggest modern threat to global growth since the recession in
2008-09.