Quiet trading day on Wall Street despite biotechnology stocks boost
US stocks closed slightly lower in quiet trading on Monday after drifting most of the day between gains and losses.
Energy companies fell along with the price of oil while biotechnology and drug companies rose after Pfizer announced it was buying a cancer drug maker.
Trading remained subdued, as it has been for most of the month, with many investors remaining on the sidelines until after Labour Day.
The Dow Jones industrial average lost 23.15 points, or 0.1%, to 18,529.42. The Standard & Poor's 500 index lost 1.23 points, or 0.1%, to 2,182.64 and the Nasdaq composite rose 6.22 points, or 0.1%, to 5,244.60.
Cancer drug maker Medivation jumped 13.26 dollars, or 20%, to 80.42 dollars after pharmaceutical giant Pfizer announced it would buy the company for 14 billion dollars, or 81.50 dollars a share. Pfizer is buying Medivation for its heavily used prostate cancer drug Xtandi, which generates roughly two billion dollars in sales a year.
The Medivation deal pushed other biotechnology stocks higher as well, helping the Nasdaq do better than the S&P 500 and the Dow. Regeneron Pharmaceuticals, Vertex Pharmaceuticals and Alexion Pharmaceuticals all rose 3% or more.
Monday's trading was extremely light. Roughly 2.73 billion shares changed hands on the New York Stock Exchange, the lightest trading volume so far this year. It is typical for trading to slow in August, with many traders and investors finishing up their summer vacation plans.
Investors have had little to go on for the last couple of weeks. Second-quarter earnings reports are effectively over, and the next major piece of economic news does not come until Friday, when Federal Reserve chair Janet Yellen will speak at the Fed's annual conference in Jackson Hole, Wyoming.
While investors do not expect the central bank to raise interest rates at its September meeting, there is always the possibility that it will, as well as the increasing likelihood of a rate increase once the presidential election is finished.
"We are in the calm before it gets much busier after Labour Day," said David Lebovitz, a global market strategist with JP Morgan Funds.
Oil prices fell sharply. U.S. benchmark crude lost 1.47 dollars to close at 47.05 dollars a barrel and Brent crude, used to price oil internationally, declined 1.72 to close at 49.16 dollars a barrel. The drop in energy prices dragged down energy stocks, which lost roughly 1%, more than the rest of the market.
US government bond prices rose. The yield on the 10-year Treasury note fell to 1.54% from 1.58% late Friday.
In other energy commodity trading, heating oil fell three cents to 1.49 dollars a gallon and wholesale petrol fell three cents to 1.48 dollars a gallon. Natural gas rose 9.5 cents to 2.679 dollars per thousand cubic feet.
Gold fell 2.80 dollars to 1,343.40 dollars an ounce, silver fell 45 cents to 19 dollars an ounce and copper fell three cents to 2.15 dollars a pound.
The dollar rose to 100.29 Japanese yen from 100.24 on Friday. It rose against the euro to 1.1323 from 1.1324 dollars.