US stocks: Markets end higher as oil tumbles, Pfizer leaps

NEW YORK - US stocks gained on Tuesday as oil prices retreated further from their record level and Pfizer Inc., the world's largest drug maker, jumped after a forecast of aggressive cost cuts and double-digit profit growth.

Pfizer was the blue-chip Dow average's biggest percentage gainer, up nearly 4 per cent, or 97 cents, at US$26.90. That ignited other pharmaceutical stocks such as Merck & Co., up 1.7 per cent, or 54 cents, at US$33.04.

Meanwhile, crude for May delivery settled down 97 cents at US$56.04 a barrel -- well below Monday's record high of US$58.28. High oil prices tend to pinch corporate profits and curb consumer spending, and a slip in crude generally lifts the market.

Federal Reserve Chairman Alan Greenspan, speaking via satellite to an oil refiners' conference, said market forces could eventually lead to an increase in crude oil inventories and cool the recent oil price "frenzy".

The Dow Jones industrial average was up 37.32 points, or 0.36 per cent, to close at 10,458.46. The Standard & Poor's 500 Index was up 5.27 points, or 0.45 per cent, to end at 1,181.39. The Nasdaq Composite Index was up 8.25 points, or 0.41 per cent, to finish at 1,999.32.

"It's a continuation of what we've seen since last summer -- it's a market that's almost held hostage by energy," said John Caldwell, chief investment strategist at McDonald Financial Group, part of KeyCorp. He pointed to energy stocks falling, but noted many other sectors were gaining on oil's price tumble.

Drug stocks also helped lift the stock market, Caldwell said.

"It's a group that's been battered more than the overall market, and there's a bit of relief there. Pfizer is clearly helping (the market) and it's spilling over into other areas of the group."

Energy companies' shares traded lower as oil prices fell, including Exxon Mobil, down 59 cents, or almost 1 per cent, at US$60.06, and ConocoPhillips, down US$2.25, or 2 per cent, at US$108.32.

Stocks briefly trimmed their gains after Moody's Investors Service cut General Motors Corp.'s debt ratings to a step above junk status, citing the company's formidable problems, including high costs and declining market share.

But GM's shares were little affected by the close of trading, down 1 cent at US$29.04.

"The market sold off pretty close to the GM debt downgrade," said Brian Williamson, vice president, equity trading at The Boston Co. Asset Management. "There was a temporary blip, but the market's re-adjusted."

Among advancing stocks was J.P. Morgan Chase & Co., up 2.4 per cent, or 81 cents, at US$34.58, which some traders said was benefiting from bargain hunting.

"Expectations may have gotten pounded down too low for J.P. Morgan relative to its peers," said Jeffery Harte, analyst at Sandler O'Neill & Partners LP, Chicago.

But shares of Morgan Stanley declined 3 per cent, or US$1.85, to US$56.45. Shareholders and former senior executives of the investment bank on Tuesday urged the board to immediately replace embattled Philip Purcell as chief executive with their own candidate, Robert Scott.

Google Inc. gained 1.8 per cent, or US$3.28, to US$188.57, after Lehman Brothers raised its rating to "overweight" from "equal weight", citing strong fundamentals in the Web search business and valuation, among other factors.

Overall, trading was active, with 1.48 billion shares changing hands on the New York Stock Exchange, just above the 1.46 billion daily average for last year. About 1.69 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

Advancers outnumbered decliners on the New York Stock Exchange by about 9 to 7 and by about 8 to 7 on Nasdaq.

- REUTERS