US stocks eked out small gains on Monday in choppy trade on Monday, lifted by optimism over a $US68 billion takeover in the drug industry that offset worries about the state of the financial sector.
The Dow Jones industrial average rose 38.47 points, or 0.48%, to 8,116.03. The Standard & Poor's 500 Index added 4.62 points, or 0.56%, to 836.57.
The Nasdaq Composite Index gained 12.17 points, or 0.82%, to 1,489.46.
A rare piece of good news for the recession-hit economy also helped sentiment, as sales of existing US homes unexpectedly jumped 6.5% in December. The Dow Jones index of home builders' stocks rose 2.7%.
Pfizer Inc, the world's biggest drug maker, said it would buy rival Wyeth for about $US68 billion
The move suggested that some companies are attractively valued after a dismal 2008, and some analysts said it indicated other big deals could be done.
However, the Pfizer share price itself tumbled 10.3% to $15.65 on worries over what benefits, if any, it may reap from the acquisition, which had been rumoured since last week.
Caterpillar was the Dow's top drag after the heavy equipment maker forecast its 2009 profit would drop significantly from 2008 and said it would cut nearly 20,000 jobs. Caterpillar shed 8.4% to $32.67.
Home Depot was among a spate of companies to announce deep job cuts, with the world's largest home-improvement retailer slashing 7,000 jobs. Its shares rose 4.7% to $22.73.
Companies across all sectors have been chopping jobs as they deal with slowing consumer demand and the fallout from the global economic downturn.
