Indexes get a boost from rising drug stocks

May 03, 1994|By Bloomberg Business News

NEW YORK -- U.S. stocks advanced yesterday for a second day as drug stocks rallied, sparked by a Swiss company's bid to take over Syntex Corp. for $5.3 billion.

Roche Holding AG, based in Basel, Switzerland, agreed to pay $24 a share for Syntex, a maker of treatments for arthritis and skin diseases. Syntex, the most active stock in U.S. composite trading, climbed as much as $8.625, to $23.875, before closing at $23.50.

The Dow Jones industrial average rose 19.33, to 3,701.02, after dropping as much as 16.06 points earlier. Eastman Kodak Co., Aluminum Co. of America and Merck & Co. paced the advance.

Yesterday's rally marked the second straight trading session, and the third time in the past month, that stocks advanced as the bond market declined. The yield on the 30-year Treasury bond rose to 7.33 percent from 7.31 percent on Friday.

Broader stock market indexes also rallied. The Standard & Poor's 500 index rose 2.11, to 453.02. Drug makers and diversified health care providers led the advance. The Nasdaq combined composite index was lifted 6.84, to 740.68, amid a rally in computer networking companies' stocks.

Among drug companies whose shares rallied after Syntex agreed to be acquired, Merck & Co. Inc. rose $1.375, to $31; Eli Lilly Co. jumped $2.50, to $51.75; Schering-Plough rose $2.25, to $63.25; and Upjohn Co. vaulted $2, to $28.75. Bristol-Myers Squibb rose $2, to $55.875; Pfizer Inc. rose $2.125, to $61.125; and Warner-Lambert Co. rose $1.50, to $69.25.

Elsewhere, shares of networking companies rose as the Network World & Interop conference, one of the largest conferences on local area networks, began in Las Vegas yesterday morning, traders said.

Cisco Systems rose $2.1875, to $32.50; Newbridge Networks Corp. rose $4, to $54.375; Wellfleet Communications Inc. rose $3.75, to $77.625.

About eleven stocks rose for every nine that fell on the New York Stock Exchange. Trading was active, with 299 million shares trading hands by the close of trading on the Big Board.

Stocks fell earlier in the day as a report showing increased manufacturing activity raised concern about inflation and pushed bond yields higher.

Later, stocks rallied on optimism that strength in the economy would translate into higher corporate earnings, analysts said.

Yesterday morning, the National Association of Purchasing Management reported a rise in American manufacturing activity in April. The association's monthly index rose to 57.7 from 56.7 in March.

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