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* S&P 500 less than 0.5 percent away from all-time high
* Healthcare stocks rally, Humana is S&P's top gainer
* Verizon, AT&T may make break-up bid for Vodafone -report
* Goldman Sachs downgrades Hewlett-Packard, shares fall
* Indexes up: Dow 0.6 pct, S&P 0.6 pct, Nasdaq 0.8 pct
By Ryan Vlastelica
NEW YORK, April 2 (Reuters) - U.S. stocks rose on Tuesday,putting the S&P 500 within striking distance of its all-timeintraday high as healthcare stocks surged on prospects of aboost to earnings.
The group gained as planned cuts in U.S. government paymentsfor private Medicare Advantage insurers did not materialize.
Humana, which derives about two-thirds of itsrevenue from Medicare Advantage business, soared 9.1 percent to$81.79 as the S&P 500's top percentage gainer. UnitedHealthGroup, up 7.3 percent to $63.24, and Cigna Corp,up 4.4 percent to $65.66, were along among the top gainers.
"Given how lean these companies are, this news is prettysignificant and could mean a 10 to 15 percent increase inearnings," said Phil Orlando, chief equity market strategist atFederated Investors in New York.
The broader market's rise countered Monday's sell-off. Mostinvestors expect moves to be limited this week before Friday'sU.S. monthly payrolls report.
"We'll just be marking time until then, as people aresquaring their positions," said Brian Battle, director oftrading at Performance Trust Capital Partners in Chicago.
The March payrolls survey could give clues on the successin reducing unemployment, one of the primary headwinds foreconomic growth. About 200,000 jobs were created last month,according to a Reuters poll, down from 236,000 last month.
The S&P index last week set an all-time closing high, buthas thus far been unable to reach its intraday record of1,576.09, an important psychological level that analysts saycould draw in more investors. Intraday sessions have beenvolatile, with stocks dropping sharply on Monday beforerebounding.
"We're swinging seven to 10 points every day (on the S&P),so it's very possible that we could hit the all-time high, orthat we could get a reversal later on today," said Battle.
The Dow Jones industrial average was up 83.90 points,or 0.58 percent, at 14,656.75. The Standard & Poor's 500 Index was up 9.51 points, or 0.61 percent, at 1,571.68. TheNasdaq Composite Index was up 24.75 points, or 0.76percent, at 3,263.92.
Investors mostly shrugged off the latest economic data.February factory orders rose 3 percent, slightly aboveexpectations.
The Institute for Supply Management-New York's March indexof regional business activity came in at 573.3, slightly higherthan last month's 572.7.
A weak reading on U.S. manufacturing sparked a decline inMonday's session, though other indicators have pointed to astrengthening U.S. economy and helped push both the Dow and S&Pto record highs last week.
Telecommunication shares were among the most active. VerizonCommunications and AT&T have been working togetheron a breakup bid for British mobile operator Vodafone , according to the Financial Times' Alphaville blog.
Verizon rose 1 percent to $49.72 while AT&T was up 0.4percent at $37.39. Both stocks are Dow components.
U.S. shares of Vodafone gained 5.3 percent to $29.84, andVodafone's stock gave one of the biggest boosts to Europeanshares, which rose 0.9 percent.
The S&P is up 10 percent so far this year, and whileinvestors view market momentum as positive, many are alsocalling for a pullback given the size and swiftness of recentgains.
Hewlett-Packard Co slumped 5.5 percent to $22.01after Goldman Sachs downgraded the Dow component, saying itexpects the company's earnings power to come under pressure.Goldman has a $16 price target on the stock, which impliesdownside of more than 30 percent from HP's Monday closing price.
Goldman Sachs also removed Apple Inc from itsConviction Buy list, though it affirmed its "buy" rating on thestock. "We believe Apple may find it difficult to hit consensusexpectations in the March and June quarters," the bank wrote toclients. Apple rose 1 percent to $433.03.
BGC Partners late Monday said it would sell itseSpeed platform to Nasdaq OMX Group for $750 million incash. Shares of BGC soared 40 percent to $5.39.
