Stocks edge higher after holiday; Coca-Cola falls
New York • Stocks were mostly higher in midday trading Tuesday as investors returned from a long holiday weekend. Coca-Cola slumped after turning in disappointing quarterly results. Health care stocks rose following news of a big merger in the pharmaceutical sector.
KEEPING SCORE: The Dow Jones industrial average was down five points, or 0.1 percent, to 16,149 as of 12:15 p.m. Eastern. The Standard & Poor's 500 index rose three points, or 0.2 percent, to 1,842 and the Nasdaq composite rose 26 points, or 0.6 percent, to 4,272.
PHARMA DEAL: Forest Laboratories jumped $21.50, or 30 percent, to $92.88 after another drugmaker, Actavis, agreed to buy the company for $25 billion in cash and stock. Actavis makes the generic versions of hyperactivity disorder medication Concerta and the cholesterol drug Lipitor, while Forest makes the Alzheimer's treatment Namenda. Actavis rose $15.05, or 8 percent, to $206.89.
Other health-care stocks also rose. Gilead Sciences rose 2 percent and UnitedHealth Care and Amgen increased 1 percent in early trading.
LOSING ITS FIZZ: Coca-Cola dropped $1.50, or 4 percent, to $37.43 after reporting a decline in fourth-quarter profit and sales from a year ago. The company, which also makes Sprite, Dasani and Vitaminwater, says sales volume declined 1 percent in North America.
STELLAR WEEK: The stock market is coming off its best week of the year. The S&P 500 gained 2.3 percent last week. 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. The market's turnaround last week was especially notable given the rough start to the year.
"I would be very surprised if we don't see the market move back to its highs very soon," said Randy Frederick, a managing director at Charles Schwab.
BONDS, GOLD: The yield on the 10-year Treasury note fell to 2.71 percent from 2.75 percent on Friday. Gold rose $3.80, or 0.3 percent, to $1,322.70, continuing a weeklong rally. A report from the World Gold Council showed that Chinese demand for gold rose 32 percent in 2013 from 2012, a sign that overseas demand may not be as weak as originally thought.
WEATHER IMPACT: Investors got two minor economic reports on Tuesday that showed the bitter winter that has enveloped most of the nation the last two months has hurt the U.S. economy. The New York Federal Reserve's Empire State survey showed that manufacturing slowed in the region in February far more than economists expected. Meanwhile, a survey of the housing market showed homebuilder confidence fell sharply in February, due to the severe weather.
BACK FROM HOLIDAY WEEKEND: U.S. financial markets were closed Monday in observance of President's Day.