Wall Street falls after strong week; Pfizer and Allergan drag

By Sinead Carew

(Reuters) - U.S. stock indexes closed slightly lower in a quiet trading day on Wall Street after last week's strong gains, while a big healthcare deal failed to impress investors on Monday.

Pfizer's announcement of what is expected to be the biggest-ever healthcare deal pushed its shares down 2.6 percent making it one of the biggest drags on the S&P. Target company Allergan closed 3.4-percent lower after the $160 billion deal announcement.

"Today was a dull day unless you're involved in Pfizer or Allergan. Away from that, it's kind of aimless," said Brian Fenske, head of sales trading at ITG in New York. "Nobody was panicking when the market was going lower. It wasn't really on heavy volume."

The Dow Jones industrial average fell 31.13 points, or 0.17 percent, to 17,792.68, the S&P 500 lost 2.58 points, or 0.12 percent, to 2,086.59 and the Nasdaq Composite dropped 2.44 points, or 0.05 percent, to 5,102.48.

Disappointment in the Pfizer/ Allergan deal was driven by weaker-than-hoped-for projected savings from the complex deal, antitrust issues, along with a possible delay in Pfizer's plan to split into two companies, according to analysts.

A few days ahead of the U.S. Thanksgiving holiday, when markets are closed and traders take time off, about 6.18 billion shares changed hands on U.S. exchanges, below the 7.2 billion average for the 20 sessions, according to Reuters data.

After a week when the S&P 500 had its best performance of the year, investors were unimpressed by Monday's economic data and some were concerned that economic growth may be slower than expected, said Stephen Massocca, Chief Investment Officer of Wedbush Equity Management LLC in San Francisco.

"We had a very large rally last week and it's not surprising to see the market correct after that," said Massocca.

U.S. home resales fell in October as a persistent shortage of properties limited choice for potential buyers and pushed up prices, suggesting some softening in the housing market recovery after strong gains early this year.

A separate report showed Markit's Purchasing Managers Index hit a 25-month low in early November, highlighting continued weakness in the factory sector.

S&P utilities were the worst performer with a 1-percent decline, followed by telecommunications services <.SPLRCL>. Those sectors tend to be affected by expectations for a U.S. Federal Reserve hike in interest rates.

The staples <.SPLRCS> was the strongest, led by a 10.2 percent increase in shares of Tyson Foods to $48.09 after its quarterly sales beat estimates.

The energy sector <.SPNY> rose 0.7 percent, as crude prices were volatile after Saudi Arabia agreed to cooperate with other oil producers to stabilize prices but traders worried about a global supply glut and signs of rising U.S. stockpiles.

Advancing issues outnumbered decliners 1,581 to 1,466, for a 1.08-to-1 ratio; on the Nasdaq, 1,566 issues rose and 1,236 fell, a 1.27-to-1 ratio favoring advancers.

The S&P 500 posted 25 new 52-week highs and 4 lows; the Nasdaq recorded 77 new highs and 77 lows.

(Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Nick Zieminski)