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Benchmarks ended in the green as gains in biotech stocks offset discouraging retail sales numbers. Disappointing retail sales also negated concerns about a sooner-than-expected interest rate hike. Healthcare and technology stocks helped the S&P to hit a two-week high. However, disappointing earnings from Macy’s eroded some of yesterday’s gains.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) rose 0.6%, to close at 16,651.80. The Standard & Poor 500 (S&P 500) increased 0.7% to close at 1,946.72. The tech-laden Nasdaq Composite Index closed at 4,434.13; rising 1%. The fear-gauge CBOE Volatility Index (VIX) declined 8.7% to settle at 12.90. A total of 4.7 billion shares were traded on Wednesday, lower than the five-day average of 5.7 billion. Advancers outpaced declining stocks on the NYSE. For 72% stocks that advanced, 25% declined.

Shares of InterMune, Inc. surged 14.4% on news that some of the biggest European pharma companies, such as Sanofi (SNY - Analyst Report) and Roche Holding AG, have offered takeover bids for the U.S. biotech company. The Goldman Sachs Group, Inc. (GS - Analyst Report) and Centerview Partners LLC have been reportedly assisting InterMune with the bids. This was the highest intra-day gain for the company since Oct 2000.

Gains in InterMune and Jazz Pharmaceuticals Public Limited Company (JAZZ - Analyst Report), which soared 8.8%, boosted the biotech sector. This in turn helped the Nasdaq move upward. Key biotech stocks such as Gilead Sciences Inc. (GILD - Analyst Report), Vertex Pharmaceuticals Incorporated (VRTX - Analyst Report), Biogen Idec Inc. (BIIB - Analyst Report) and Regeneron Pharmaceuticals, Inc. (REGN - Analyst Report) increased 0.7%, 3.9%, 3% and 1.5%, respectively.

Separately, Amazon.com Inc.’s (AMZN - Analyst Report) shares gained 2.2% after launching a new mobile payment service. ChannelAdvisor Corp. also reported a 40% jump in Amazon’s same-store sales.

On the economic front, the U.S. Department of Commerce reported that July retail sales remained almost flat owing to slowing car demand and lower wage growth. It also missed the consensus estimate of a 0.2% gain. This was the worst retail sales reading in the last six months. However, July sales increased 3.7% year over year. The dismal report adversely affected the retailers. Nonetheless, investors grew hopeful that dismal data will deter the Fed from raising rates earlier than forecasted. 

Markets witnessed a series of disappointing earnings results yesterday. Macy's, Inc. (M - Analyst Report) reported second quarter earnings per share of 80 cents, missing the Zacks Consensus Estimate of 86 cents, as discounts affected profit margins. The company also reported revenues of $6,267 million, short of the Zacks Consensus Estimate of $6,294 million. Macy’s also lowered its fiscal 2014 comparable-store sales growth guidance from 2.5%-3% to 1.5%-2%. Shares of Macy’s declined 5.5%.

Shares of King Digital Entertainment plc (KING - Snapshot Report) plunged 23.1% on weak revenues and lackluster guidance for fiscal 2014. The company reported second quarter revenues of $593.5 million, lower than the Zacks Consensus Estimate of $618 million.

The Health Care Select Sector SPDR ETF (XLV) was the biggest gainer among the S&P 500 sectors. The sector gained 1.2%. Key healthcare stocks from the sector such as Celgene Corporation (CELG - Analyst Report), Alexion Pharmaceuticals, Inc. (ALXN), UnitedHealth Group Incorporated (UNH) and Merck & Co. Inc. (MRK) rose 2.3%, 2.1%, 1.6% and 1.4%, respectively. All S&P 500 sectors gained on Wednesday.

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