US stocks fell in choppy trade and the Nasdaq slid to a fresh 6 and 1/2-year low on Monday as shares of the biggest drugmakers fell after Merck''s proposed a $41 billion take-over of Schering-Plough. Large mergers and acquisitions are generally viewed as a show of support for equity valuations.
But analysts said with major indexes trading around 12-year lows, evidence of thawing credit markets and economic recovery is needed to bring investors back into the market. Pharmaceuticals were among the top drags on the Dow industrials, with Merck down 7.7 percent at $20.99, Johnson & Johnson shedding 2.9 percent to $46.60 and Pfizer slipping 0.8 percent to $12.63. But Schering-Plough shares jumped 14.2 percent to $20.13 on news of the deal.
The Dow Jones industrial average dropped 79.89 points, or 1.21 percent, to 6,547.05. The Standard & Poor''s 500 Index fell 6.85 points, or 1.00 percent, to 676.53. The Nasdaq Composite Index slid 25.21 points, or 1.95 percent, to 1,268.64. Big technology stocks pulled the Nasdaq down to its lowest close since October 2002.
Trading was moderate on the New York Stock Exchange, with about 1.56 billion shares changing hands, slightly above last year''s estimated daily average of 1.49 billion, while on Nasdaq, about 2.06 billion shares traded, below last year''s daily average of 2.28 billion. Declining stocks outnumbered advancing ones on the NYSE by 5 to 2, while on the Nasdaq, about 13 stocks fell for every two that rose.