New York – Wall Street surged higher Monday 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 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,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “Many investors remain concerned about the economy but are optimistic that a soft (landing) lies ahead for U.S. financial markets.”
He said Friday’s report on November employment from the 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 Commerce Department will issue data on factory orders for October and the Institute for Supply Management will release 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.
