U.S. Stocks Rise as Drug Shares Rally After House OKs Overhaul

March 22 (Bloomberg) -- U.S. stocks gained, erasing an early decline, as health-care shares rallied after the House of Representatives passed an overhaul of the industry.

Merck & Co. and Pfizer Inc. climbed more than 1.5 percent to help lead health-care companies to the biggest gain among 10 groups in the Standard & Poor’s 500 Index after the House approved legislation that will ensure tens of millions of uninsured Americans will get medical coverage.

“The health-care legislation approval removes the uncertainty,” said Richard Sichel, chief investment officer at the Philadelphia Trust Co., which manages $1.4 billion. “On top of that, the shares had been beaten down, so you can find reasonably valued companies.”

The S&P 500 increased 0.3 percent to 1,162.8 at 10:37 a.m. in New York. The Dow Jones Industrial Average climbed 35 points, or 0.3 percent, to 10,776.98.

U.S. stocks retreated at the start of trading amid concern growing government debt and rising interest rates will derail the global economy.

Advanced economies face “acute” challenges in tackling high public debt, and unwinding existing stimulus measures won’t come close to bringing deficits back to prudent levels, John Lipsky, first deputy managing director of the International Monetary Fund, said in a speech yesterday at the China Development Forum in Beijing.

The Reserve Bank of India raised its benchmark rates after local financial markets closed on March 19, a month earlier than the next scheduled review, to tame the fastest inflation in more than a year.

Policy makers in Australia and Malaysia have also increased rates since the end of February, while China has ordered lenders to set aside more funds as reserves twice this year.

“There’s a lot of structural headwinds around at the moment,” said Markus Steinbeis, head of equity portfolio management at the German unit of Pioneer Investments, which oversees about $221 billion globally. “Sentiment is neutral to negative and we could see a couple of days of consolidation before trading higher.”