NEW YORK – Stocks seesawed in a narrow range and ended a touch higher Monday as investors weighed news of several major acquisition deals again rising oil prices and jitters over the pharmaceutical sector after Friday's jury verdict against Merck.
The Dow Jones industrial average (search) closed up 10.66, or 0.1 percent, at 10,569.89. The Dow climbed nearly 82 points in morning activity before moving in and out of positive territory. The Standard & Poor's 500 index (search) gained 2.02, or 0.17 percent, to 1,221.73, while the Nasdaq composite index (search) advanced 5.85, or 0.27 percent, to 2,141.41.
Analysts said that with many traders on vacation and no economic news to guide the market, stocks were particularly vulnerable to concerns about soaring oil costs and the effect of rising interest rates on the economy.
"As the market goes higher with two major headwinds — oil and interest rates — you're going to have some profit taking," said Bill Strazzullo, chief market strategist at State Street Global Markets.
Wall Street was pleased by news that an investor consortium led by Ripplewood Holdings won't raise its offer for Maytag Corp. (MYG), clearing the way for Whirlpool Corp.'s (WHR) planned $1.7 billion acquisition of the appliance maker. Stocks also got a boost when OSI Pharmaceuticals Inc. (OSIP), a drug company focused on cancer treatments, said it planned to buy Eyetech Pharmaceuticals Inc. (EYET) for nearly $1 billion.
Monday's spate of merger news was heartening to a market that is continually looking for signs of confidence in the economy. When companies are takeover shopping, it's a sign they're feeling optimistic about business, not just in the coming months, but the next few years.
Shares of Merck (MRK) extended Friday's losses, sinking 2.5 percent to $27.38 on the New York Stock Exchange, making it the worst performer on the Dow Jones Industrial average. Merck was found liable for a death by a Texas jury in a case involving its painkiller, Vioxx, on Friday. The company said it would appeal the verdict.
The Merck verdict "could be a distraction for a long time," said Stephen Massocca, head of trading and president, Pacific Growth Equities in San Francisco. "It's going to be difficult for other drug companies that face litigation," he added.
Shares of Merck rival Pfizer Inc. (PFE) were down 0.3 percent at $25.57, matching a 0.3 percent decline in the American Stock Exchange Pharmaceutical Index .
Meanwhile, OSI Pharmaceuticals Inc., a drug maker focused on cancer treatments, said it is acquiring Eyetech Pharmaceuticals Inc. for $20 per share — a 20 percent premium to Eyetech's Friday closing price. OSI said the $935 million buyout of Eyetech, which makes drugs for eye diseases, should fatten earnings for the next four years beginning in 2006. Eyetech shares surged $4.14, or 29.6 percent, to $18.13, while OSI fell $8.85, or 21.7 percent, to $31.92.
Maytag signed a formal agreement to be acquired by rival appliance maker Whirlpool Corp. for more than $1.7 billion after investment firm Ripplewood Holdings reportedly said it won't raise its offer for Maytag. The end of the bidding war sent Maytag down 2 cents to $18.69, and Whirlpool down 35 cents to $81.48.
U.S. crude for September delivery rose 10 cents to settle at $65.45 a barrel, after trading as high as $66.25 on the New York Mercantile Exchange (search).
High oil prices are usually bad for stocks outside the energy sector as they can shrink corporate profits and hurt consumer spending.
"I think everyone knows it's not a huge incremental piece of information when oil's up another 25 cents or so, even when it's near another record," said Bill Sutherland, director of equity research at Boenning & Scattergood.
Ketchup maker H.J. Heinz Co. (HNZ) said its profit slipped 19 percent in the fiscal first quarter, as higher costs offset sales growth led by increased North American volume. But setting aside one-time charges, Heinz's earnings and sales topped Wall Street expectations, sending shares up 42 cents to $36.72.
Bonds ended lower, with the yield on the 10-year Treasury note rising to 4.22 percent from 4.21 percent Friday. The U.S. dollar was mixed against other major currencies in European trading, while gold prices finished unchanged.
The Russell 2000 index of smaller companies rose 4.96, or 0.76 percent, to 657.47.
Overseas, Japan's Nikkei stock average surged 1.31 percent. Britain's FTSE 100 rose 0.11 percent, Germany's DAX index added 0.24 percent, and France's CAC-40 fell 0.04 percent.
Reuters and the Associated Press contributed to this report.