US STOCKS-Market wavers as drugs weigh; Citi down late
(Adds Citigroup shares falling after the closing bell)
NEW YORK, April 29 (Reuters) - U.S. stocks ended little changed on Tuesday as setbacks for two drugs weighed down the pharmaceutical sector, offsetting the relief from a retreat in record high crude oil prices.
Trading volume was scant as investors turned cautious with the Federal Reserve's two-day meeting under way. Policy makers are expected to trim interest rates and signal an end to a series of deep cuts started in September.
The prospect of steady rates helped support the dollar and contributed to a 2.5 percent drop in oil prices from a record high. Crude's decline sparked a rally in airlines, but dragged on energy-related shares.
Merck & Co Inc (MRK.N) shares fell more than 10 percent a day after the company said U.S. regulators rejected a new cholesterol drug, prompting brokerages to cut price targets on the stock.
Further dragging on the drug sector, biotechnology companies Genentech Inc DNA.N and Biogen Idec Inc (BIIB.O) said a study of one of its cancer treatments failed to show the drug was also effective for treating lupus. [ID:nWNAS0367]
"Pharmaceuticals used to be the traditional recession play, but it seems they have so many negative stories, they can't get out of their own way," said Mark Schlarbaum, head trader at Global Capital Management in Conshohocken, Pennsylvania.
If the drug companies could overcome that trend, Schlarbaum said they would attract some interest because "they're all cheap. It's hard to say where is the relatively safe trade in this environment."
The Dow Jones industrial average .DJI was down 39.81 points, or 0.31 percent, at 12,831.94. The Standard & Poor's 500 Index .SPX was down 5.43 points, or 0.39 percent, at 1,390.94. The Nasdaq Composite Index .IXIC was up 1.70 points, or 0.07 percent, at 2,426.10.
About 1.23 billion shares changed hands on the NYSE, well below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.75 billion shares traded, below last year's daily average of 2.17 billion.
Shares of Citigroup Inc (C.N) fell in extended-hours trading after the bank said it plans to sell $3 billion of common stock to bolster its capital levels. [ID:nN29365213] Citi shares slid 3.1 percent to $25.50 from a close at $26.32 on the New York Stock Exchange.
Merck shares slid 10.4 percent to $37.14 on the New York Stock Exchange, while Genentech DNA.N dropped 7.2 percent to $67.93. On the Nasdaq, Biogen Idec shares declined 5.2 percent to $61.33.
The American Stock Exchange pharmaceutical index .DRG was down 1 percent.
June crude CLM8 dropped $3.12 to settle at $115.63 a barrel -- sharply below Monday's record near $120 a barrel.
Shares of Northwest Airlines NWA.N surged 22.8 percent to $9.36 and Delta Air Lines jumped 14.6 percent to $8.24. High fuel costs have pummeled airline shares and have even grounded some carriers. Continued...
