Stocks edge higher in quiet, post-holiday trading

Associated Press

Stocks closed mostly higher Tuesday on Wall Street as traders got back to work after a long holiday weekend.

It was a fairly quiet day for traders, who had relatively little news to react to.

Health care stocks far more than the rest of the market after pharmaceutical company Actavis said it was buying rival Forest Laboratories for $25 billion in cash and stock.

Investors liked the deal, which is intended to make the companies more competitive in a rapidly changing industry and allow them to command higher prices from insurance companies. Actavis makes the generic versions of hyperactivity disorder medication Concerta and the cholesterol drug Lipitor, while Forest Labs makes the Alzheimer’s treatment Namenda.

The Dow Jones industrial average lost 23.99 points, or 0.2 percent, to 16,130.40. The Dow was dragged lower by Coca-Cola, which fell $1.46, or 4 percent, to $37.47.

Coke reported that its income and sales fell in the fourth quarter compared with the same period a year ago. The company said sales volume declined 1 percent in North America, its largest market.

The Standard & Poor’s 500 index rose 2.13 points, or 0.1 percent, to 1,840.76. The Nasdaq composite rose 28.76 points, or 0.7 percent, to 4,272.78.

Forest Labs and Actavis were among the biggest gainers in the S&P 500 index. Forest Labs soared $19.65, or 28 percent, to $91.04 and Actavis rose $9.59, or 5 percent, to $201.47.

Other drug makers also rose sharply. Gilead Sciences rose $2.60, or 3 percent, to $83.81 and Eli Lilly rose $1.05, or 2 percent, to $55.25.

The Forest Labs-Actavis deal is the latest in big-name, big-budget deals to be announced so far this year. Last week cable giant Comcast announced a deal to buy Time Warner Cable for $45 billion and Japan’s Suntory Holdings announced last month it was buying Beam, the maker of Jim Beam and Maker’s Mark whiskey, for $13.9 billion.

Investors should expect more large deals this year, said Mike Serio, regional chief investment officer at Wells Fargo Private Bank.

“This has been building up for three or four years now,” he said. “Companies have so much money on their balance sheets and there’s only so much you can do with it. You could increase your dividend. You could buy back stock. You could spend it on (business investments), or you can do deals.”

The stock market is extending its gain from last week, when the S&P 500 increased 2.3 percent. Investors liked what they heard from Federal Reserve Chair Janet Yellen, who said she planned to continue her predecessor’s market-friendly policies for the time being.

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