NEW YORK (TheStreet) -- The Dow Jones Industrial Average and S&P 500 hovered just below the flatline on Monday as a rally in pharmaceuticals stocks trumped a selloff in oil-related companies and plunging crude prices.
The drugs sector was surging after Merck (MRK) said it would buy Cubist Pharmaceuticals (CBST) for $8.4 billion, a 37% premium to Friday's closing price. Helping to mitigate the S&P 500's earlier losses, Celgene (CELG) jumped 3.4%, Gilead Sciences (GILD) added 2.2%, Vertex Pharmaceuticals (VRTX) climbed 1.1%, and Regeneron (REGN) increased 2%.
The Dow slipped 0.05% and the S&P 500 was down 0.03%. The Nasdaq, buoyed by biopharma stocks, climbed 0.22%.
Energy stocks continued to suffer on Monday as crude prices hemorrhaged and the latest data from China and Japan stoked global growth worries.
Brent crude prices hit a five-year low, while West Texas intermediate crude tumbled 2.3% to below $65 a barrel on continued fears the commodity will crash as supply outstrips demand. Several investment banks, including Morgan Stanley, cut oil forecasts after OPEC said it would not limit output to address the supply glut. Morgan Stanley analyst Adam Longson slashed forecasts for oil to bottom as low as $43 a barrel in 2015.
Oil exploration and drilling companies were tumbling on Monday. Transocean (RIG) fell 4.7%, EOG Resources (EOG) slid 3% and Occidental Petroleum (OXY) slipped 4.4%. ConocoPhillips (COP) dropped 3.2% after setting its 2015 capex budget at $13.5 billion, around 20% below 2014 spending.