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US: Wall Street lower as investors react to Pfizer deal

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[NEW YORK] Wall Street traded slightly lower on Monday morning with major drugmakers down following the announcement that Pfizer would buy the cancer drugmaker Medivation for US$14 billion.

A half-hour into the morning's trading, the Dow Jones Industrial Average was down 0.3 per cent at 18.490.15.

The broader S&P 500 fell 0.3 per cent at 2,177.71 and the Nasdaq, where Medivation is listed, lost 0.1 per cent at 5,231.47.

Markets were awaiting signals on US interest rate policy from this week's monetary symposium in Jackson Hole, Wyoming at which Federal Reserve Chairwoman Janet Yellen will delivery a closely watched address.

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Shares in Medivation were up nearly 20 per cent at US$80.45 after Pfizer offered US$81.50 a share for the company.

The deal will allow the New York-based Pfizer to market the prostate cancer medication Xtandi. Investors have focused on cancer drugs as they are among the most dependable sources of revenue for drug makers.

Tesoro, another comparably sized cancer drug maker listed on the Nasdaq, was also higher, at 3 per cent above Friday's close.

Other major drugmakers were split, with Johnson & Johnson down 0.6 per cent but Merck & Co up 0.2 per cent.

The Texas gas station and convenience store operator CST Brands Inc rose 0.1 per cent on the announcement of a deal to be purchased by Canada's Alimentation Couche-Tard Inc for US$4.4 billion.

With crude prices falling at the start of the week, oil company stocks were likewise lower, with Chevron and Exxon Mobil both trading 0.7 per cent lower and ConocoPhillips off 0.8 per cent.