Closing Market Report
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Merger announcements drive trading activity
By Joe Bel Bruno
Associated Press
NEW YORK » Wall Street surged higher yesterday as investors put aside Pfizer Inc.'s decision to halt development of a key drug and focused instead on another series of takeover deals.
Pfizer shares fell by about 12 percent after the company stopped the development of the cholesterol drug torcetrapib because of deaths and cardiovascular problems among people taking the drug during clinical trials. The stock was also downgraded by several Wall Street analysts on concern that Pfizer's revenue growth will now weaken.
The news was offset by several merger announcements that reinforced the belief that companies are optimistic about the economy and therefore are willing to take some risks. Leading them was Bank of New York Corp.'s $16.5 billion deal to buy rival Mellon Financial Corp. to create an asset management powerhouse.
"Trading activity is being driven by the large amount of merger and acquisition announcements, specifically in the banking, semiconductor and hotel sectors of the market," Michael Sheldon, chief market strategist at Spencer Clarke LLC. "Many investors remain concerned about the economy, but are optimistic that a soft land lies ahead for U.S. financial markets."
He said Friday's report on November employment from the U.S. Labor Department will add "fuel to the fire" if it's weaker than expected, or provide relief after a string of sluggish economic reports.
Today, the U.S. Commerce Department issues data on factory orders for October, and the Institute for Supply Management releases its services sector business index.
The Dow Jones industrial average rose 89.72, or 0.74 percent, to 12,283.85.
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 12.41, or 0.89 percent, at 1,409.12, and the Nasdaq composite index added 35.18, or 1.46 percent, to 2,448.39.
The Russell 2000 index of smaller companies was up 14.68, or 1.88 percent, at 795.85. The index is now at a new closing high.
Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.75 billion shares, compared to 2.83 billion on Friday.
Stocks had stumbled Friday after a manufacturing survey unexpectedly contracted in November, pushing the major indexes to a loss for the week. However, major indexes are still poised to finish 2006 with double-digit gains.
The Dow so far this year is up 14.61 percent, the S&P 500 has gained 12.88 percent, and the Nasdaq 11.02 percent.
Bonds were little changed, with the yield on the benchmark 10-year Treasury note flat at 4.43 percent from late Friday. The dollar was mixed against other major currencies, while gold prices fell.