Wall Street 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, when 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, and three had billion-dollar-plus price tags. The Nasdaq Biotech index rose 0.9 percent but is about 5.6 percent below a record close hit 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 3.6 percent to $122.18 while U.S. shares of Catamaran added 24 percent to $60.12.

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

Horizon rose 14.5 percent to $24.98 on the Nasdaq while Hyperion rose 7.9 percent to $46.12. U.S. shares of Teva rose 1 percent to $62.60 while Auspex added 41.5 percent to $100.34.

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

The deals follow 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 their 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 1.4 percent.

The Dow Jones industrial average rose 260.68 points, or 1.47 percent, to 17,973.34, the S&P 500 gained 21.85 points, or 1.06 percent, to 2,082.87 and the Nasdaq Composite added 49.63 points, or 1.01 percent, to 4,940.85.

Advancing issues outnumbered declining ones on the NYSE by 2,210 to 532, for a 4.15-to-1 ratio; on the Nasdaq, 1,753 issues rose and 618 fell, for a 2.84-to-1 ratio.

The S&P 500 was posting 16 new 52-week highs and no new lows; the Nasdaq Composite was recording 49 new highs and 9 new lows.

(Editing by Chizu Nomiyama and Nick Zieminski)