NEW YORK (Reuters) - U.S. stocks rose to a 19-month high on Friday as Merck eased concerns about the impact of healthcare reform, saying its costs will be relatively low.
Energy shares lifted the broad market after oil rose 1.7 percent to above $85 a barrel on positive economic data. The S&P energy index .GSPE gained 2.3 percent, while Chevron (CVX.N) was up 1.8 percent at $82.67.
Merck & Co (MRK.N) jumped 5 percent to $35.46, making it the top gainer on the Dow. The drugmaker said its costs related to U.S. healthcare reform will be a far smaller percentage of total company sales compared with rival drugmakers.
The news helped the sector rebound after a two-day selloff on fears over the impact from the new healthcare overhaul law. The S&P healthcare index .GSPA was up 1.1 percent but is down 2.5 percent for the month.
"The sector has been a dismal performer for almost a month now, so maybe investors are finally beginning to get their hands around all the minutia in the legislation that was passed and what it actually means for companies in the near term," said Jeff Kleintop, chief market strategist at LPL Financial in Boston.
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