By Anora Mahmudova and Victor Reklaitis, MarketWatch

Freeport McMoRan rallies for 7th consecutive session

U.S. stocks closed higher on Wednesday as a rally in health-care stocks helped propel them to gains during an up-and-down trading session.

Analysts said investors are still unwinding bets that stocks will fall further--a crowded trading strategy that has produced big intraday swings.

The Nasdaq Composite rose 42.79 points, or 0.9%, to finish at 4,791.15, driven by a rally in biotechs. The iShares Nasdaq Biotechnology ETF rallied 2%, recovering some of Tuesday's steep losses.

Meanwhile, the S&P 500 gained 15.91 points, or 0.8%, to end at 1,995.83. The S&P at one point hit 1,999 but struggled to trade past a so-called resistance level of 2000, which market participants say would indicate a bullish trend for the broad stock-market benchmark.

Investors "need the S&P 500 to make a run and a break through 2,000," and that would energize other markets, said Scott Schuberg, CEO of Rivkin Securities in Australia, in a note late Tuesday. The U.S. stock benchmark is down 3.1% for the year.

(http://w.graphiq.com/w/9HKN8IZ109)

The Dow Jones Industrial Average added 122.10 points, or 0.7%, to close at 16,912.29, posting gains for the fourth straight session, markings its longest win streak since July 14, when stocks rose for four straight sessions.

Earlier, the main indexes, which have been closely tracking oil prices, dipped into negative territory, following volatile crude futures lower.

"The energy sector rallied drastically over the past few days, spreading optimism to broader markets and it's not surprising to see some consolidation after big gains," said Brian Fenske, head of sales trading at ITG.

Fenske said gains over the past week had more to do with the unwinding of bearish positions in the energy sector.

"The trade of shorting energy stocks, particularly low-quality, highly-leveraged companies, was overcrowded, so when oil began to rally, investors scrambled to cover short positions, taking all energy stocks higher," Fenske said.

Among the top five gainers on the S&P 500, four are down between 27% and 51% for the year.

(https://twitter.com/michaelbatnick/status/651825043236880388)

Investors also focused on earnings results from companies such as Constellation Brands Inc. (STZ).

"Until we start seeing earnings results next week, trading will be driven by macro news and not fundamentals," Fenske added.

Other markets: November West Texas Intermediate crude rose as high as 2% early Wednesday (http://www.marketwatch.com/story/oil-prices-extend-gains-on-lower-us-production-2015-10-07) but turned lower, to settle 1.5% lower at $47.81 a barrel, logging its first loss in four sessions.

Energy shares led the way higher for European markets early Wednesday, but the fall in oil prices reversed those gains. Trading remains closed for a holiday in Shanghai, and Japan's central bank kept its monetary policy unchanged (http://www.marketwatch.com/story/bank-of-japan-stands-pat-on-policy-despite-economic-troubles-2015-10-07).

Gold settled 0.2% higher at $1,148.70 an ounce, rising for the fourth straight session. Meanwhile the dollar was little changed.

Stocks to watch: Yum! Brands (YUM) shares plunged 19% for the biggest drop among S&P 500 components after the parent company for KFC, Pizza Hut and Taco Bell late Tuesday cut its earnings outlook (http://www.marketwatch.com/story/yum-brands-cuts-outlook-on-china-woes-2015-10-06-164855228) for the year, citing a slower-than-expected recovery in China and lingering currency issues.

Miner Freeport-McMoRan Inc. (FCX) was among the S&P's best gainers, rallying about 10%, booking its seventh straight day of gains. Since Sep 29, the stock gained 46%, however it is still down more than 44% since the start of the year.

Adobe Systems Inc. (ADBE) on Tuesday disappointed investors after issuing a lower-than-expected outlook for its coming fiscal year. Shares fell 5.3%.

Constellation Brands Inc. (STZ) shares rose 2.5% after adjusted earnings topped expectations.

U.S. economic news: There were no top-tier U.S. economic reports due Wednesday, and no Federal Reserve speeches. Minutes from the last Fed meeting are slated to get released Thursday, along with weekly jobless claims.

 

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(END) Dow Jones Newswires

October 07, 2015 16:53 ET (20:53 GMT)

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