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Benchmarks finished Monday’s choppy run mostly higher as investor sentiment following new deals in the health care sector, positive pending home sales data and intense selling pressure on internet stocks. While merger and acquisition activity in the health care sector helped the S&P 500 and Dow close in the green, the Nasdaq ended in negative territory due to decline in high-growth tech stocks. For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) gained 0.5% to close Monday’s trading session at 16,448.74. The Standard & Poor 500 (S&P 500) went up 0.3% to finish at 1,869.43. The tech-laden Nasdaq Composite Index dropped a meager 0.03% to 4,074.40. The fear-gauge CBOE Volatility Index (VIX) dropped 0.6% to settle at 13.97. Total volume for the day was roughly 7.4 billion shares, higher than this month’s average of 6.5 billion. Advancing stocks outnumbered the decliners on the NYSE. For 50% stocks that advanced, 46% declined.
Merger and acquisition activities in the health care sector boosted investor sentiment. AstraZeneca PLC’s (NYSE:AZN) shares surged 12.2% after Pfizer Inc. (NYSE:PFE) confirmed their interest to takeover AstraZeneca for about $100 billion. This is the second time Pfizer made a bid for Britain’s AstraZeneca. Pfizer led the advance among the Dow components. Shares of Pfizer rose 4.2%.
In another development, Forest Laboratories has agreed to buy drug development collaboration company Furiex Pharmaceuticals, Inc. (NASDAQ:FURX) for nearly $1.1 billion in cash. Shares of Furiex Pharmaceuticals soared 28.6%. Bio-technology company Agenus Inc. (NASDAQ:AGEN) signed a deal with Merck & Co. Inc. (NYSE:MRK). Shares of Agenus surged 19.5%. However, shares of Merck dropped 0.9%.
The Health Care Select Sector SPDR (XLV) increased 0.6%. Major drug manufacturing companies such as Johnson & Johnson (NYSE:JNJ) and AbbVie Inc. (NYSE:ABBV) rose 1.6% and 3.5%, respectively. Also, key bio-tech stocks such as Gilead Sciences Inc. (NASDAQ:GILD), Vertex Pharmaceuticals Incorporated (NASDAQ:VRTX) and Amgen Inc. (NASDAQ:AMGN) increased 0.2%, 0.5% and 0.1%, respectively.
Investors were buoyed by encouraging economic data on pending home sales. The National Association of Realtors reported that Pending Home Sales Index, a forward looking indicator based on contract signings, went up 3.4% to 97.4 in March. The rise in pending home sales in March was way ahead of the consensus expectation of a 0.6% increase.
The mixed bag of events caused wild swings in the benchmarks. The Dow swung within a 187-point range. Declines in high-growth tech stocks had a negative impact on Nasdaq. Stocks including Amazon.com Inc. (NASDAQ:AMZN), Facebook, Inc. (NASDAQ:FB), Netflix, Inc. (NASDAQ:NFLX), LinkedIn Corporation (NYSE:LNKD) and Yelp, Inc. (NYSE:YELP) plunged 2.4%, 2.7%, 2.4%, 6.4% and 3.6%, respectively.
However, gains in certain technology bellwethers helped restrict the negative impact from the selloff. The Technology Select Sector SPDR (XLK) increased 0.9%. Shares of Apple Inc. (NASDAQ:AAPL), the largest component of both the Nasdaq and S&P 500, gained 3.9%. Other bellwethers such as Microsoft Corporation (NASDAQ:MSFT), Google Inc. (NASDAQ:GOOG), International Business Machines Corporation (NYSE:IBM) and Verizon Communications Inc. (NYSE:VZ) gained 2.4%, 0.2%, 1.9% and 1.4%, respectively.
Six out of 10 sectors of the S&P 500 ended in the green. The Consumer Staples Select Sector SPDR (XLP) led the advance as the sector rose 1.1%. Key stocks from the sector such as The Procter & Gamble Company (NYSE:PG), Philip Morris International, Inc. (NYSE:PM), Wal-Mart Stores Inc. (NYSE:WMT), CVS Caremark Corporation (NYSE:CVS) and Pepsico, Inc. (NYSE:PEP) increased 1.9%, 1.0%, 1.5%, 0.5% and 1.8%, respectively.