Wall St higher as biotechs rally on M&A deals

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks rallied more than 1 percent on Monday, with biotech stocks among the most active names amid a number of major deals in the space.

The day's gains were broad as major indexes rebounded off a sharp decline last week, a period over which major indexes lost more than 2 percent. All ten primary S&P 500 sectors rose on the day.

Trading could continue to be volatile ahead of earnings season, which will start in earnest in mid-April, as well as before the March payroll report on Friday. Stock markets will be closed for the Good Friday holiday, leaving investors unable to trade on the jobs data until the following week.

There were four major deals in the biotech space, three with billion-dollar-plus price tags. The Nasdaq Biotech index rose 0.6 percent but remains more than 5 percent below a record close earlier this month. The group has recently been under pressure, with the index down 5.2 percent last week in its biggest weekly decline in a year.

"On the surface, it would appear that biotech is expensive, but if insiders are acquiring, that should give more confidence to broad-market investors," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

OptumRx Corp, a unit of UnitedHealth Group, agreed to buy pharmacy benefit manager Catamaran Corp in a deal worth $12.78 billion. Shares of UnitedHealth, a Dow component, rose 2.5 percent to $120.99 while U.S. shares of Catamaran added 24 percent to $60.12.

Teva Pharmaceutical said it would buy Auspex Pharmaceuticals Inc for $3.5 billion. Ireland's Horizon Pharma Plc said it would acquire Hyperion Therapeutics Inc in an all-cash deal worth about $1.1 billion.

U.S. shares of Teva rose 3.1 percent to $63.88 while Auspex added 42 percent to $100.52. Horizon rose 15.5 percent to $25.23 on the Nasdaq while Hyperion rose 7.7 percent to $46.05.

Separately, Fujifilm Holdings Corp agreed to acquire U.S. biotechnology firm Cellular Dynamics International Inc for $307 million. Cellular shares more than doubled in heavy trading.

The deals followed reports last week of Intel Corp talks to buy Altera Corp in a deal that could top $10 billion.

An index of pending home sales rose 3.1 percent in February, reaching the highest level in 1-1/2 years, in a sign the lackluster recovery in the U.S. housing market could be accelerating. The PHLX Housing index rose 1.3 percent.

The Dow Jones industrial average rose 264.52 points, or 1.49 percent, to 17,977.18, the S&P 500 gained 21.14 points, or 1.03 percent, to 2,082.16 and the Nasdaq Composite added 39.61 points, or 0.81 percent, to 4,930.83.

NYSE advancing issues outnumbered decliners 2,096 to 823, for a 2.55-to-1 ratio; on the Nasdaq, 1,717 issues rose and 891 fell, for a 1.93-to-1 ratio.

The S&P 500 was posting 21 new 52-week highs and 1 new lows; the Nasdaq Composite was recording 72 new highs and 34 new lows.

(Editing by Chizu Nomiyama and Nick Zieminski)