US STOCKS-S&P 500, Dow climb as health insurers, financials gain

* Insurers rise after White House kills rebate rule
* Biotechs, drugmakers drag on healthcare sector
* Indexes: Dow up 0.9%, S&P 500 up 0.2%, Nasdaq down 0.1%

(Updates to close)
By Caroline Valetkevitch
NEW YORK, July 11 (Reuters) - The Dow and S&P 500 rose on
Thursday to close at record highs as health insurers gained
after the Trump administration scrapped a plan designed to rein
in prescription drug prices, while financial shares climbed with
bond yields.
A 5.5% gain in UnitedHealth Group Inc UNH.N helped the Dow
close above 27,000 points for the first time. Cigna Corp CI.N
surged 9.2%.
The abandoned proposal would have required health insurers
to pass on billions of dollars in rebates they receive from
drugmakers to Medicare patients. On the flip side, drugmakers such as Merck & Co Inc MRK.N
and Pfizer Inc PFE.N dropped following the news, and the
Nasdaq biotech index .NBI was down 1.5%. Merck ended down 4.5%
while Pfizer was down 2.5%. The S&P 500 healthcare index
.SPXHC ended flat.
The S&P 500 traded above 3,000 for a second day in a row but
again failed to close above that milestone, suggesting investor
cautiousness.
"The fact that it has not been able to get through it and
stay above that level has been a big psychological negative,"
said Michael James, managing director of equity trading at
Wedbush Securities in Los Angeles.
Helping to support stocks were comments from Federal Reserve
Chairman Jerome Powell, which supported investor expectations
for an interest-rate cut.
In his first day of testimony before Congress on Wednesday,
Powell confirmed the U.S. economy was still under threat from
disappointing factory activity, tame inflation and a simmering
trade war and said the Fed stood ready to "act as appropriate."
Powell testified before the Senate Banking Committee on
Thursday.
U.S. benchmark bond yields rose, and the S&P 500 financial
index .SPSY gained 0.6%.
The Dow Jones Industrial Average .DJI rose 227.88 points,
or 0.85%, to 27,088.08, the S&P 500 .SPX gained 6.84 points,
or 0.23%, to 2,999.91 and the Nasdaq Composite .IXIC dropped
6.49 points, or 0.08%, to 8,196.04.
Iron Mountain IRM.N slumped after Bank of America Merrill
Lynch downgraded the document storage company's shares to
"underperform," citing recent declines in recycled paper
pricing.
A Labor Department report showed U.S. underlying consumer
prices rose by the most in nearly 1-1/2 years in June, but that
was unlikely to change expectations the Fed would cut rates this
month. Declining issues outnumbered advancing ones on the NYSE by a
1.04-to-1 ratio; on Nasdaq, a 1.25-to-1 ratio favored decliners.
The S&P 500 posted 48 new 52-week highs and 4 new lows; the
Nasdaq Composite recorded 77 new highs and 54 new lows.
Volume on U.S. exchanges was 6.17 billion shares.