Mergers Offset Pfizer Woes
Robert Holmes
12/04/06 - 04:38 PM EST
Updated from 4:10 p.m. EST
Corporate dealmaking powered an advance in stocks Monday and overcame news that
Pfizer (PFE) would stop work on its most promising drug.
The
Dow Jones Industrial Average rose 89.72 points, or 0.74%, to 12,283.85, supported by gains of 2.3% in
IBM (IBM) and
American Express (AXP).
Notably absent from the rally was Pfizer. Shares the world's biggest drugmaker slumped $2.96, or 10.6%, to close at $24.90 after the company said this weekend that it will end development on torcetrapib, a cholesterol fighter that had been seen as the successor to Lipitor.
For Pfizer, the news is particularly discouraging because the drug was expected to eventually produce billions of dollars in annual sales. Now, the company will have to try to find a way to fill the gap.
The
S&P 500 added 12.41 points, or 0.89%, to 1409.12. Meanwhile, the tech-laden
Nasdaq Composite jumped 35.18 points, or 1.46%, to 2448.39, aided by increases of 4.8% or more in
Sun Microsystems (SUNW) and
Wynn Resorts (WYNN).
The rally came a week after stocks had their worst session in more than four months.
"The equity markets may be showing signs of age, however [they] have yet to roll over and die," said Paul Nolte, director of investments with Hinsdale Associates. "The mood coming into one of the best months of the year is poor. The technical indicators have come off a bit from their overbought condition."
Marc Pado, U.S. market strategist with Cantor Fitzgerald, said that while there was no economic data on the docket during the session, Tuesday's ISM services index will be a key report, as will Friday's employment numbers. "Traders should be nervous ahead of these data," he said.
About 2.75 billion shares changed hands on the
New York Stock Exchange. Advancers beat decliners by a 3-to-1 margin. Volume on the Nasdaq was roughly 1.99 billion shares, with winners outpacing losers 7 to 3.
By sector, semiconductors were the big winners of the session. The Philadelphia Semiconductor Sector Index was up 2%. Oil stocks were among few losers, with the Philadelphia Oil Service Sector Index losing 0.6% and the Amex Oil Index easing 0.3%.
As a new week unfolded,
Bank of New York (BK) and
Mellon Financial (MEL) said they would merge in a $16.5 billion stock swap.
The deal will form the world's biggest securities-processing and custodial bank. Bank of New York surged 12% to $39.75. Mellon Financial gained 6.8% to close at $42.78.
Elsewhere, chipmaker
LSI Logic (LSI) said it will acquire
Agere (AGR) in a $4 billion stock transaction. The combined company would start out with annual revenue of around $3.5 billion. LSI tumbled 13.6% to $9.12. Agere jumped 8.5% to $19.30.
Station Casinos (STN) received an $82-a-share buyout bid led from its CEO and private equity firm Colony Capital. Shares of the casino operator vaulted 23% to $84.90.
Shares of
Home Depot (HD) finished higher even after the home-improvement retailer said it hasn't been involved in buyout talks with private equity firms.
The stock had added 5.1% over the previous four sessions amid rumors of a $100 billion leveraged buyout. Home Depot ended the session up another 23 cents, or 0.6%, to $39.20.
Away from equities, energy prices eased. January oil futures were down 99 cents to finish at $62.44 a barrel, and natural gas dropped 61 cents to $7.81 per million British thermal units. Gold edged higher by 30 cents to close at $650.90 an ounce, and silver tacked on 5 cents at $14.24 an ounce.
Treasuries ticked higher, with the benchmark 10-year up 2/32 in price to yield 4.42%. The 30-year bond was up 3/32 in price, yielding 4.54%. The dollar was gaining against the world's major currencies.
"The rallies have been based on falling 10-year yields pushing [rate-sensitive] stocks higher, and a weak dollar buoying multinational companies," said Pado. "The rally has been based on easing inflation fears and a soft landing."
Overnight in Asia, Japan's Nikkei lost 0.1% to 16,303, and Hong Kong's Hang Seng tacked on 0.1% to 18,703. In Europe, London's FTSE 100 rose 0.5% to 6050, while Germany's Xetra DAX added 0.9% to 6295.
