U.S. Stocks Rise, Led by Biotechnology Sector

All Major Sectors Within S&P 500 Higher Except Energy

By DAN STRUMPF
Updated March 31, 2014 4:52 p.m. ET

Stocks rallied broadly on the final trading day of the quarter, capping a lackluster three months with a strong gain led by the beaten-down biotechnology sector.

The Dow Jones Industrial Average gained 135 points, or 0.8%, to 16458. The S&P 500 index added 15 points, or 0.8%, to 1872. The Nasdaq Composite Index gained 43 points, or 1%, to 4199.

Stocks struggled in the first quarter to maintain the upward momentum of last year, though they remain near record highs. The S&P 500 gained 1.3% in the first quarter, and is just 0.3% off its March 7 record high. The Dow is down 0.7% in the quarter—its first quarterly decline in a year—and from its Dec. 31 record high.

All major sectors within the S&P 500 were higher with the exception of the energy sector. Out in front was the biotechnology sector, which has been hit hard in recent sessions as many investors have questioned the highflying prices of many companies. Traders said volumes were relatively light, with many sellers stepping aside after unloading positions in recent sessions.

"I think the sellers…are exhausted," said David Seaburg, head of equity sales trading at brokerage Cowen.


In the Markets





The Nasdaq Biotechnology Index gained 3%, though the benchmark remains down more than 10% over the last month. That decline pulled the broader Nasdaq Composite Index down 2.5% in March, its biggest monthly loss since October 2012.
Investors were also buoyed bycomments by Federal Reserve Chairwoman Janet Yellen, who said the U.S. economy still requires support from the central bank's low interest-rate policy. The comments helped ease concerns that the Fed under the new chairwoman had plans to raise interest rates sooner than expected.
Later this week, investors are likely to focus on readings on manufacturing activity on Tuesday and the closely watched monthly employment report on Friday.
Investors say they are eager for updated economic data that are less likely to be colored by the recent harsh winter weather, after several readings earlier this year pointed to a growth slowdown. "We're starting the second quarter pretty much where we started the first quarter—not much changed and still concerns about whether we'll see the arrival of better growth," said Kate Warne, investment strategist at Edward Jones.
Ms. Warne said she is encouraging investors to consider adding bonds to their portfolios to protect against declines in stocks later this year, though she expects major indexes to post modest gains.
The yield on the 10-year Treasury note ticked up to 2.726% from 2.712% late Friday.
Gold futures slipped 0.8% to $1,283.40 an ounce, their lowest level since Feb. 10. Crude-oil futures fell 0.1% to $101.58 a barrel. The dollar gained fell against the euro but gained ground against the yen.
In Europe, the Stoxx Europe 600 added 0.4%, after being up as much as 0.7% earlier.
Consumer prices in the euro zone rose in March rose 0.5% on the year, below expectations of a 0.6% increase, and well below the European Central Bank's target of just under 2%.
The anemic pace of price increases steps up the pressure on the European Central Bank to introduce fresh measures to stave off low inflation when it meets later this week. A number of ECB officials said last week that they were considering steps to combat dangerously low inflation.
Most Asian markets ended a weak quarter on a positive note. Japan's Nikkei Stock Average rose 0.9%, but ended the first quarter down 9% on the year. China's Shanghai Composite slipped 0.4% on Monday, and lost 3.9% on the quarter.
In corporate news, Biogen Idec BIIB +3.99% gained 4% after the company and its partner said the U.S. Food and Drug Administration approved its hemophilia B treatment. Biogen has been one of the harder-hit biotech stocks recently, losing 15% the last two weeks after running up 22% the first two months of the year, and 91% in 2013.
Biofuel Energy BIOF +132.48% surged 141% after David Einhorn's Greenlight Capital disclosed late Friday an increased stake, and a preliminary nonbinding proposal to acquire the company.
Write to Dan Strumpf at daniel.strumpf@wsj.com

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