Pfizer Sparks Optimism on Wall Street

On Wall Street, stock prices moderately increased on Monday, thanks to optimism fueled by Pfizer’s acquisition in the pharmaceutical sector, which caused warnings from companies about deteriorating business conditions to take a back seat.

The Dow Jones index rose by 38 points or 0.48 percent, to 8,116 points. The S&P 500 index gained 0.56 percent, reaching 836 points, while the Nasdaq index increased by 0.8 percent, to 1,489 points. Pfizer, the world’s largest pharmaceutical company, announced that it would acquire the competing company Wyeth for approximately $68 billion, leading to the conclusion that there are companies attractive for acquisition following the significant drop in stock prices in 2008. "There hasn’t been a major acquisition for a long time, so this news shows that there is potential for such deals," explains Kurt Brunner, a manager at Swarthmore Group.

However, Pfizer’s stock price fell by more than 10 percent as investors questioned what Pfizer gains from this acquisition. After an initial strong rise, Wyeth’s stock price also fell by 0.8 percent. Positive market sentiment was also influenced by data showing an unexpected 6.5 percent increase in existing home sales in the U.S. in December. Analysts say that this still does not mean that the real estate market has hit bottom, but it indicates market stabilization. As a result, the Dow Jones index for the construction sector rose by 2.7 percent. Meanwhile, Home Depot’s stock price jumped by 4.7 percent after news that the company would reduce its workforce by 7,000.

Among the biggest losers yesterday was Caterpillar’s stock, which fell by 8.4 percent after the agricultural machinery manufacturer warned that its profits this year would be significantly lower than last year and announced layoffs of nearly 20,000 workers. Significant price fluctuations were also recorded in the financial sector. Initially, stock prices fell due to investors’ fears that banks, affected by the credit crisis, would need to raise fresh capital. However, towards the end of trading, this sector recovered, and the S&P financial index rose by 2.1 percent. Trading volume on Wall Street was moderate yesterday. Approximately 1.27 billion shares changed hands, while last year’s daily average was 1.49 billion. European stock markets also saw stock prices rise on Monday. The London FTSE index jumped by 3.9 percent, to 4,209 points, while the DAX index of the Frankfurt Stock Exchange rose by 3.5 percent, to 4,326 points. (H)