* Twitter jumps after signaling profitability in 4th quarter
* Celgene tumbles after results, drags on healthcare sector
* Yellen, Warsh out of Fed chief race - report
* Dow up 0.42 pct, S&P 500 up 0.30 pct, Nasdaq up 0.12 pct (Updates to mid-afternoon, changes byline)
By Chuck Mikolajczak
NEW YORK, Oct 26 (Reuters) - U.S. stocks advanced on Thursday to recover some declines from the prior session, after a round of positive corporate earnings, although gains were curbed by a drop in the healthcare sector.
As third-quarter earnings season nears the half-way mark, 74 percent of companies have topped expectations, above the 72 percent beat rate for the past four quarters.
However, earnings growth for the quarter is currently 5.3 percent, well below the double-digit growth rates of the prior two quarters. With major U.S. indexes at record levels, earnings have been scrutinized to see if they warrant stretched valuations.
DowDuPont was up 3.5 percent as the biggest boost to the S&P 500. It forecast third-quarter profit well above Wall Street's expectations ahead of the combined company's first earnings report next week.
Twitter jumped 18.8 percent after the company said it could turn its first-ever profit in the fourth quarter, helped by cost cuts and new sources of revenue.
"It’s not terribly popular to be saying it makes sense the markets are hitting new highs, but I look and I see a good economic backdrop, I see earnings growth and I see central banks basically managing quite well on the exit," said Ron Temple, Head of US Equities and Co-Head of Multi Asset Investing at Lazard Asset Management in New York.
"So what could go wrong - the single biggest factor that is hard to predict is who is the new Fed chair."
Trump's search has narrowed down to Fed Governor Jerome Powell and Stanford University economist John Taylor, according to a Politico report. A White House official told Reuters that no final decision had been made.
In a step towards enacting Trump's tax cut plan, the U.S. House of Representatives voted to clear a procedural path forward for the tax bill, which is expected to be unveiled next week.
The Dow Jones Industrial Average rose 98.56 points, or 0.42 percent, to 23,428.02, the S&P 500 gained 7.65 points, or 0.30 percent, to 2,564.8 and the Nasdaq Composite added 7.80 points, or 0.12 percent, to 6,571.70.
The healthcare sector, off 1.01 percent, held gains in check, led lower by a 19.6-percent plunge in Celgene, the biggest drag on the S&P 500 and the Nasdaq. The company reported lower-than-expected sales for its psoriasis drug Otezla and lowered its overall 2020 sales outlook.
A fall of 4.5 percent in Bristol-Myers Squibb also weighed on the sector after its quarterly profit fell short of estimates due to higher costs and an inventory write-off. In addition, AbbVie dropped 2.4 percent after reporting deaths in psoriasis studies.
Advancing issues outnumbered declining ones on the NYSE by a 1.22-to-1 ratio; on Nasdaq, a 1.14-to-1 ratio favored advancers. (Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)