NEW YORK — The stock market rebounded Tuesday as traders placed bets that the outcome of an election in Massachusetts would make it harder for President Barack Obama to make changes to health care.
The Dow Jones industrial average rose 116 points to a 15-month high after falling 101 on Friday. Broader indexes also rose, and demand for the safety of government debt waned.
The stock market has been climbing for 10 months on hopes that an easing recession would boost corporate profits.
But lingering problems such as high unemployment and a weak housing market have raised questions about whether the rally has been overdone.
“This is just a critical period when we get to see the litmus test of earnings and then guidance,” said Philip Dow, managing director of equity strategy at RBC Wealth Management in Minneapolis.
Republican Scott Brown’s victory Tuesday to fill the seat of late Sen. Edward Kennedy shifts power in the Senate, breaking the Democrats’ filibuster-proof majority. Republicans have the 41 votes necessary to block Democratic proposals, including the health care bill. Polls closed four hours after the closing bell on Wall Street.
Rising health care stocks led the market higher as the prospect of a logjam in Washington eased concerns that profits at companies such as insurers and drug makers would suffer.
Technology shares rose smartly after a Credit Suisse analyst raised his rating on Ciena Corp., a maker of telecommunications equipment, predicting that revenue would exceed expectations.
Technology shares are sure to be a key focus for the market today after IBM reported a 9 percent increase in earnings late Tuesday for the final three months of 2009.
The Dow rose 115.78, or 1.1 percent, to 10,725.43. The broader Standard & Poor’s 500 index rose 14.20, or 1.3 percent, to 1,150.23. It was the highest close for the Dow and S&P 500 since Oct. 1, 2008. The technology-heavy Nasdaq composite rose 32.41, or 1.4 percent, to 2,320.40.
