Pharma sell-off cuts short Wall St rally

NEW YORK (AFP) - A sell-off of drug company stocks put a hold on Wall Street's two-week-long rally on Tuesday.

But beer shares got a boost from the US$122 billion (S$170 billion) merger announced by Anheuser-Busch InBev and SABMiller.

The Dow Jones Industrial Average finished down 49.97 points (0.29 per cent) at 17,081.89.

The broad-based S&P 500 dropped 13.77 (0.68 per cent) to 2,003.69, while the tech-rich Nasdaq Composite Index fell 42.03 (0.87 per cent) to 4,796.61.

"The market's gone up every day basically for one week and a half, so it's entitled to a small down day," said Mace Blicksilver of Marblehead Asset Management.

"The news is certainly nothing that exciting that would get people to buy stocks at these higher levels, but there's a very solid support in the market."

Pharmaceuticals, a large part of the markets' staying positive on Monday, were heavily sold. Novartis lost 1.5 per cent, Merck 2.5 per cent, Amgen 3.6 per cent, and Regeneron 3.6 per cent.

On the Dow, United Technologies fell 1.2 per cent and IBM 1 per cent, while UnitedHealth topped gainers, adding 1.2 per cent.

The massive AB InBev-SABMiller deal, which will create a company which sells about one out of every three beers drunk in the world, sent the US-traded shares of AB InBev up 2.1 per cent.

The bigger beneficiary was Molson Coors Brewing, which surged 9.9 per cent on expectations that SABMiller will have to sell its holdings in US brewer MillerCoors to Molson Coors to please antitrust investigators.

Twitter shares added 1.1 per cent as the company announced it would lay off 8 per cent of its workforce as part of a strategy to build income.

The cuts - which amount to 336 jobs - come less than a week after Jack Dorsey, one of the founders of Twitter, returned to the job of CEO on a permanent basis as part of an effort to revive growth at the San Francisco-based social network.

Video streamer Netflix meanwhile lost 3.3 per cent ahead of its quarterly earnings release.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.06 per cent from 2.09 per cent Friday, while the 30-year dipped to 2.9 per cent from 2.92 per cent. Bond prices and yields move inversely.