* S&P 500 inches closer to all-time intraday high
* Healthcare stocks rally, Humana is S&P’s top percentage gainer
* Indexes up: Dow 0.5 pct, S&P 0.4 pct, Nasdaq 0.4 pct
By Caroline Valetkevitch
NEW YORK, April 2 (Reuters) - U.S. stocks rose on Tuesday, moving the S&P 500 closer to its all-time intraday high, as increased payment rates for some health insurers boosted the sector and Cyprus concluded bailout talks.
The U.S. government dropped plans to cut payments for private Medicare Advantage insurers and instead said it would allow a 3.3 percent raise.
Shares of Humana, which derives about two-thirds of its revenue from Medicare Advantage business, jumped 6.2 percent to $79.64 and was the biggest percentage gainer on the S&P 500. UnitedHealth Group gained 6.2 percent to $62.67.
“They didn’t expect the result that they got. That will help with their bottom line,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
Stocks also gained because “Cyprus was given a reprieve,” she said.
Cyprus’s deal, which still requires ratification, would mean the country receives a 10 billion euro loan and will have until 2018 to carry out measures to shore up its finances. The country’s finance minister resigned after concluding the deal.
The S&P 500 last Thursday set an all-time closing high but has been unable to reach its intraday record of 1,576.09, a level that analysts say could draw in even more investors.
The Dow Jones industrial average was up 72.46 points, or 0.50 percent, at 14,645.31. The Standard & Poor’s 500 Index was up 6.91 points, or 0.44 percent, at 1,569.08. The Nasdaq Composite Index was up 14.32 points, or 0.44 percent, at 3,253.50.
Healthcare sector stocks are still seen as cheap relative to the overall market. Humana, which has a market cap of about $11.9 billion, has a forward price-to-earnings ratio of 9.4, below the S&P 500 P/E average ratio of about 16.5. UnitedHealth has a P/E ratio of 10.6 and Cigna has a P/E ratio of 9.7.
“We do think that healthcare stocks are a nice combination of dividend yields, growth and low valuations and we are very constructive on the sector,” said Jim Russell, senior equity strategist for U.S. Bank Wealth Management in Cincinnati.
The broad market’s rise countered Monday’s sell-off. Most investors expect moves to be limited this week before Friday’s U.S. monthly payrolls report.
The March jobs report could give clues on how successful the Federal Reserve has been in lowering unemployment, one of the primary headwinds for the economy. About 200,000 jobs were created last month, according to a Reuters poll, down from 236,000 in February.
In an effort to bring down the unemployment rate, the Fed has maintained an accommodative monetary policy, which has also benefited stocks.
Strengthening U.S. data has also helped stocks. Among Tuesday’s reports, February factory orders rose 3 percent, slightly above expectations.
A weak reading on U.S. manufacturing on Monday sparked a pullback in stocks.
Other gainers included Hertz Global Holdings shares, which rose 7.6 percent to $23.58 after the company forecast strong earnings and revenue through 2015 due to increasing global demand for car rentals and benefits from its recently completed acquisition of Dollar Thrifty.
Also in the healthcare sector, shares of Cigna were up 3.5 percent at $65.10.
Among decliners, Delta Airlines Inc shares were off 6.6 percent at $15.20. Delta’s unit revenue for March rose 2 percent from a year earlier but was below its forecast due to lower-than-expected demand and temporary inefficiencies during implementation of new technology.
Shares of Nasdaq OMX Group Inc. plunged 11.4 percent to $28.36 after agreeing to buy a BGC Partners Inc. trading platform. BGC shares were up 46.8 percent at $5.65.
Shares of Hewlett-Packard fell 5.7 percent to $21.99 after Goldman Sachs downgraded them to “sell.”