Pfizer’s surprise announcement of possible health risks connected with its Celebrex arthritis drug pushed stocks lower in very heavy trading Friday, renewing investors’ concerns over the pharmaceutical sector. Still, the stock market’s major indices finished the week slightly higher.
Wall Street drove Pfizer to a nearly seven-year low after the Dow component announced that a new study showed people taking high doses of Celebrex, the best-selling arthritis drug, had an increased risk of heart troubles. A similar revelation led to the removal of Merck & Co.’s competing Vioxx drug earlier this year — and led to a major sell-off of Merck shares. Pfizer said it will leave Celebrex on the market.
Despite moderate losses during the session, analysts remained bullish on the overall market.
“The nice thing about this market is that you may get a sell-off of Pfizer, but the rest of the market behaves incredibly well,” said Mark Bronzo, managing director of Gartmore Separate Accounts LLC. “The market’s acting like people want to be in it. So when you get something like this, people find other places to put their money and don’t just sell everything.”
The Dow Jones industrial average dropped 55.72 points, or 0.5 percent, while the broader Standard & Poor’s 500-stock index declined 8.99 points, or 0.8 percent. The technology-rich Nasdaq composite index lost 10.95 points, or 0.5 percent.
Stocks managed moderate gains during the week despite a sharp climb in oil prices. Investors were cheered by the Federal Reserve’s positive statement on the economy, which came alongside Tuesday’s quarter percentage point interest rate hike.
For the week, the Dow gained 1 percent, while the S&P 500 index added 0.5 percent. The Nasdaq composite climbed 0.3 percent. Stocks have been up in six of the last eight weeks.
Pfizer’s announcement drew attention away from the Labor Department’s consumer price index report for November. The CPI rose 0.2 percent in November, coming off an 0.6 percent rise in October. “Core” CPI — excluding food and fuel costs, which vary greatly — also rose 0.2 percent for November. The results were in line with Wall Street’s forecast and show that inflation isn’t a major factor in the economy.
The markets were volatile due to a “quadruple-witching” day on Wall Street — the quarterly expiration of index futures and options, as well as individual stock futures and options. Stocks can vary widely and trade quickly on heavy volume as investors cash in their options or futures and sign up for new contracts.
Stocks also saw pressure from crude oil futures, which shot past $46 per barrel on concerns about higher demand due to a colder-than-expected winter. A barrel of light crude settled at $46.28, up $2.10 on the New York Mercantile Exchange.
The pharmaceutical sector has been under intense pressure since Merck’s Sept. 30 announcement that it would pull Vioxx from the market due to increased risk of heart attack and stroke found among its users. At the time, Pfizer maintained Celebrex was safe, but investors began to worry that hidden health problems, whether overlooked by drug companies or the U.S. Food and Drug Administration, could derail any number of top-selling prescription drugs.
“Drug stocks are growth stocks without any growth prospects,” said Russ Koesterich, U.S. equity strategist at State Street Corp. in Boston. “You look at the pipeline of future products — there are no pipelines. They’re coming under pricing pressure from the government. There’s generic competition. Why buy the stocks?”
In the wake of the Celebrex announcement, shares of Pfizer fell $3.23, or 11.2 percent, to $25.75 — the stock’s lowest close since Jan. 16, 1998. The stock had fallen as low as $21.99 shortly after it began trading, but recovered slowly through the rest of session. More than 285 million shares of Pfizer traded hands, nearly nine times the average daily volume of 33 million shares.
Fellow Dow component Merck lost 20 cents to $31.59.
AstraZeneca PLC dropped $3.11 to $37.10 after it announced that clinical trials of its Iressa lung cancer treatment failed to show significant improvements in patients. Companies that make rival lung cancer drugs spiked on the news. Genentech Inc. rose $2.87 to $51.36 and ImClone Systems Inc. gained $1.12 to $45.60, while OSI Pharmaceuticals Inc. surged $21.28, or 45.2 percent, to $68.38.
In the retail sector, watched closely for signs of a holiday shopping turnaround, Circuit City Stores Inc. slipped 56 cents to $14.72 after reporting a narrower-than-expected loss for the quarter. The company lost 3 cents per share, while Wall Street expected a loss of 8 cents per share. Revenues, however, were slightly below analysts’ forecasts.
Profits at sporting goods giant Nike Inc. rose 47 percent for the second quarter, with a weak dollar helping overseas sales. The company beat Wall Street forecasts by 11 cents per share. Nike was up $5.80 to $91.70.
Overseas, Japan’s Nikkei average rose 1.41 percent. In Europe, Britain’s FTSE 100 was down 0.81 percent, France’s CAC-40 lost 1.73 percent and Germany’s DAX index fell 1.22 percent.