Health stocks help Wall Street limit losses as energy drags

By Yashaswini Swamynathan

(Reuters) - The Dow and the S&P 500 were little changed in early afternoon trading on Monday, with declines in energy and materials stocks being offset by a bounce in healthcare shares, which boosted the Nasdaq.

Oil prices fell more than 2.5 percent after traders took in their stride the impact of wildfires on Canada's oil output and after another U.S. inventory build.

A bigger-than-expected drop in China's imports and exports in April pointed to weak demand in the world's second-biggest economy and weighed on materials stocks.

Caterpillar's 3.3 percent drop weighed the most on the Dow, while Berkshire's 1.6 percent fall dragged on the S&P.

"It seems like the shadow of higher rates and weakening economy doesn't help stocks and that's what we are seeing," said Mohannad Aama, managing director of Beam Capital in New York.

"I think we are seeing a continuation of what's been going on since last week, which is the effect of the Federal Reserve's meeting, what we've seen with the job's report on Friday and what's going on with the earnings season. Combining them it is a not-so-clear picture."

U.S. stocks broke a three-day losing streak to close higher on Friday after investors focused on the positive aspects of a generally disappointing April jobs report.

A Reuters survey following the jobs report showed that Wall Street's top banks have all but written off the chance of a June rate increase. Most now see the rate hike coming in September.

At 12:38 p.m. ET (1638 GMT) the Dow Jones industrial average was down 42.59 points, or 0.24 percent, at 17,698.04, and the S&P 500 was up 1.83 points, or 0.09 percent, at 2,058.97.

The Nasdaq Composite was up 20.24 points, or 0.43 percent, at 4,756.40, helped by a 2.2 percent gain in the Nasdaq biotech index.

Five of the 10 major S&P sectors were lower, led by the energy, down 2 percent, and materials, down 1 percent, indexes.

The health index's 1.3 percent rise lead the advancers, buoyed by Allergan's 6.6 percent gain.

Shares of Lending Club tumbled 27 percent to $5.20 after the CEO of the world's biggest online lending platform resigned following an internal probe.

Krispy Kreme jumped 24 percent to $20.91 after agreeing to be taken private for $1.35 billion.

Wayfair rose 12.2 percent to $40.39 after the online furniture retailer's first-quarter sales beat analysts' estimates.

Declining issues outnumbered advancing ones on the NYSE by 1,566 to 1,343. On the Nasdaq, 1,511 issues rose and 1,218 fell.

The S&P 500 index showed 30 new 52-week highs and three new lows, while the Nasdaq recorded 36 new highs and 42 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Ted Kerr and Savio D'Souza)