Dow outperforms as Wall Street rises, healthcare stocks lead gains

Oct 20 (Reuters) - The Dow rose 1% on Tuesday, outperforming the benchmark S&P 500 while the healthcare sector provided Wall Street's biggest boost and technology was its biggest drag.

Healthcare led gains among the S&P 500's 11 major ‌sector indexes, hitting a record high. Eli Lilly was the S&P 500's biggest index point contributor while UnitedHealth, Merck & Co, Johnson & Johnson ‌and Amgen helped boost the blue-chip Dow industrials.

Declines in megacap stocks pulled down the communication services sector. Energy shares underperformed as oil prices fell after touching a five-month high. Oil ​traders were weighing a meeting between the Iranian president and Pakistan's army chief, a US-Iran mediator, against Houthi attacks on Saudi infrastructure and reports of vessel attacks in the Gulf.

While the heavyweight technology sector eased 0.3%, it was the biggest index-point drag on the S&P 500 and kept the Nasdaq close to flat. Technology stocks had rebounded on Monday from a selloff last week when investors worried about steep spending and financing costs for AI developments.

"Equity ‌investors are still a little skeptical around the AI ⁠trade and the ability for some of these companies to monetize their investments, so you're seeing a bit of a rotation into other areas of the market," said Jim Baird, chief investment officer at Plante Moran Financial Advisors, pointing ⁠to advances on Tuesday in small caps and healthcare companies.

"Investors are looking for other opportunities outside of tech, and healthcare is one of the beneficiaries of that," he said.

The Dow Jones Industrial Average rose 529.85 points, or 1.02%, to 52,495.88, the S&P 500 gained 21.84 points, or 0.28%, to 7,712.57 and the Nasdaq Composite lost 6.07 ​points, ​or 0.02%, to 26,424.82.

The S&P 500 value index rose 0.9% compared with a 0.2% ​drop in its growth counterpart. The small-cap Russell 2000 index ‌finished up 1.7%.

With a 1% gain, the financial services sector was the S&P 500's second-biggest index point boost. Defensive sectors also outperformed, with real estate adding 1.7% and utilities climbing 1.2%.

A 1.7% drop in Netflix, a 1.6% decline in Meta and a 1% loss in Google parent Alphabet sent the communication services index down 0.9%.

SpaceX reported a third-quarter profit after the market closed that blew past estimates, boosting its shares 4% in late trading.

Netflix issued a weaker-than-expected forecast for fourth-quarter profit after the bell, and its shares fell 6%.