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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
* Indexes up: Dow 0.6 pct, S&P 0.6 pct, Nasdaq 0.7 pct
By Angela Moon
NEW YORK, April 2 (Reuters) - U.S. stocks rose on Tuesday,pushing the S&P 500 within striking distance of its all-timeintraday high, as healthcare stocks surged after a governmentdecision raised prospects of higher profits.
The group gained after the U.S. government dropped plans tocut payments for private Medicare Advantage insurers and insteadsaid it would raise them by 3.3 percent.
Humana, which derives about two-thirds of itsrevenue from Medicare Advantage business, rose 7 percent to$80.11. UnitedHealth Group rose 6.2 percent to $62.67,and Cigna Corp was up 4.1 percent to $65.49.
Despite the gains, stocks in the healthcare sector are stillseen as cheaper than the overall market. Humana, which has amarket cap of about $11.9 billion, has a forwardprice-to-earnings ratio of 9.4, below the S&P 500 P/E averageratio of about 16.5. UnitedHealth has a P/E ratio of 10.6 andCigna has a P/E ratio of 9.7.
"We do think that healthcare stocks are a nice combinationof dividend yields, growth and low valuations and we are veryconstructive on the sector," said Jim Russell, senior equitystrategist for U.S. Bank Wealth Management in Cincinnati.
The broad market's rise countered Monday's sell-off. Mostinvestors expect moves to be limited this week before Friday'sU.S. monthly payrolls report.
In an effort to bring down the unemployment rate, theFederal Reserve has maintained an accommodative monetary policy,which has also benefited stocks.
"Good numbers are good and bad numbers are good because itkeeps the Fed at the side of the market," said Burt White,managing director and chief investment officer at LPL Financialin Boston.
"The market continues to move higher, driven by the premiseof stimulus."
The March payrolls survey could give clues on how successfulthe Fed has been in lowering unemployment, one of the primaryheadwinds for the economy. About 200,000 jobs were created lastmonth, according to a Reuters poll, down from 236,000 inFebruary.
The S&P index last week set an all-time closing high but hasthus far been unable to reach its intraday record of 1,576.09,an important level that analysts say could draw in moreinvestors. Intraday sessions have been volatile, with stocksdropping sharply on Monday before rebounding.
The Dow Jones industrial average was up 85.94 points,or 0.59 percent, at 14,658.79. The Standard & Poor's 500 Index was up 8.79 points, or 0.56 percent, at 1,570.96. TheNasdaq Composite Index was up 22.95 points, or 0.71percent, at 3,262.12.
"We've not had two consecutive up or down days in 10sessions, and that is a good sign of a trend reversal," Whitesaid.
Investors mostly shrugged off Tuesday's data. Februaryfactory orders rose 3 percent, slightly above expectations.
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 Monday'sdecline, although other recent indicators pointed to astrengthening economy and helped Dow and S&P to record highslast week.
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.
Among decliners, Delta Airlines Inc shares were off7 percent at $15.11. Delta's unit revenue for March rose 2percent from a year earlier, but was below its forecast due tolower-than-expected demand, temporary inefficiencies duringimplementation of new technology and lower close-in bookingsdriven by the sequester.
But Hertz Global Holdings shares rose 7.3 percent to$23.50 after the company forecast strong earnings and revenuethrough 2015 due to increasing global demand for car rentals andbenefits from its recently completed acquisition of DollarThrifty.
