MARKET SNAPSHOT: Financials Lead Dow's April Rise; Health Care Lags

By Kate Gibson

One wouldn't know it by looking at this week's flu-inspired gains in health care, but the sector is shaping up to be the biggest loser in an otherwise bright month for stocks, according to initial results released Tuesday.

At Monday's close, the Dow Jones Industrial Average was up nearly 5.5% for the nearly completed month, leaving the blue-chip index down almost 8.6% in 2009, according to a preliminary report released on Tuesday by Dow Jones Indexes.

The Dow Jones U.S. Financials Index gained the most in April, up 16.8%, while its U.S. Health Care Index posted the largest loss, off almost 1.4%.

"Over the past month and a half or so, defensive areas of the market have experienced relative weakness based on the fact that investors have rotated into economically sensitive areas," said Michael Sheldon, chief market strategist at RDM Financial Group, adding that "health care, consumer stables and utilities will continue to underperform on a relative basis, so long as the economy continues to pick up."

On Tuesday, health-care shares led gains for a second consecutive day, pacing a limited advance that had the Dow Jones Industrial Average (DJI) recently up 22.62 points, or 0.3%, at 8,047.62. The S&P 500 Index (SPX) climbed 1.51 points, or 0.2%, to 859.02, while the technology-laden Nasdaq Composite (RIXF) held steady at 1,679.44.

"Health-care stocks are getting a lift this week because of the swine flu epidemic," Sheldon said. .

Topping Wall Street's expectations also helped bolster shares of companies including laboratory equipment maker Waters Corp. (WAT), its shares up nearly 17% in afternoon trade and ahead 20.4% year-to-date after the company reported a 7% increase in first-quarter income.

Also topping forecasts, insurer Coventry Health Care Inc. (CVH) reported a steep decline in first-quarter profit due in part to higher medical costs, but is shares rose 8% as the company still beat expectations. .

And shares of drugstore chains including CVS Caremark Corp. (CVS) and Walgreen Co. (WAG) also climbed, with both expecting to gain on increased demand from the sale of hygiene products and pharmaceuticals if swine flu spreads.

Anticipated health-care reform also comes into play, with some health-care companies likely to experience "difficulties in making money with strong regulatory oversight," said Art Hogan, chief market strategist, Jefferies & Co.

The most cost-effective providers or companies that help to make the medical profession more efficient should benefit from expected changes under the Obama administration, Hogan said.

CVS' MaintenanceChoice program, launched last year, is designed to position the drugstore chain as "the low-cost provider of pharmaceuticals," offering volume discounts for multiple-month refills, said Hogan.

In Europe, the Dow Jones Stoxx 50 Index was up 9.8% for April as of Monday's close, leaving that gauge off 4.4% so far this year. The Dow Jones Stoxx 600 Automobiles and Parts Index tallied the largest sector gain for the month, up 29.1%, while the Dow Jones Stoxx 600 Health Care Index posted the sharpest decline, off almost 0.1%, according to Dow Jones' preliminary report. .

In Asia, the Dow Jones Asia/Pacific Consumer Goods Index rose by the largest percentage, up 15.2% for April, while the Dow Jones Asia/Pacific Utilities Index tallied the smallest rise, up 0.2%, Dow Jones said. .

Globally, the Dow Jones World Automobiles and Parts Titans Index performed best, up 28.7% for the month, while the Dow Jones World Health Care Titans Index took the biggest hit, retreating 2%.