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Stocks Surrender Most Of Day's Gains, As These Sectors Aid Nasdaq

Stocks closed higher Monday, although gains of more than 2% ended up much reduced by the closing bell as the market continued to seek a consistent direction.

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The Nasdaq composite, which was up as much as 2.3%, closed 0.5% higher. The S&P 500 cut its gain by more than three-fourths, ending 0.3% higher. Selling picked up in the final minutes of trading.

The Dow Jones industrial average climbed 0.2%. Merck (MRK) had the largest percentage gain on the Dow at 5%. The company's Keytruda drug extended the lives of lung cancer patients in a late-stage trial. The drug is already approved to treat some lung cancer patients. Merck shares jumped back above the 50-day moving average but have a long way to go before a buy point appears.

Volume fell compared with Friday's totals, according to early computations. Declining stocks outnumbered advancers modestly on the NYSE, while winners led by about 9-to-7 on the Nasdaq.

The three major indexes remain below their 50-day moving averages. But they are in a tentative bottom as they hold above their April 2 lows. The Russell 2000 was up 0.4% at the bell. But the small-cap benchmark met resistance at the 50-day moving average last week.

Monday's rally was surprising in its early strength because the trade row with China has not abated and there were new geopolitical worries. President Trump tweeted about an imbalance in auto tariffs with China. Tensions in the Middle East increased after Israel attacked a military base in Syria. That followed news that Syria used chemical weapons on rebels, and Trump suggested the U.S. would retaliate.

Biotechs rose more than 4% as a group on a headline-heavy day for the industry.

Novartis (NVS) offered $8.7 billion to acquire AveXis (AVXS), while Ionis Pharmaceuticals (IONS) is teaming up with AstraZeneca (AZN) on a liver disease treatment. Celgene (CELG) was rumored to be interested in buying Agios Pharmaceuticals (AGIO).

AveXis soared more than 80% and Agios jumped 9%, but the other stocks were little changed.

Chip stocks also led, thanks to analyst comments. Evercore ISI raised the price targets on Intel (INTC) and chip-gear firm Lam Research (LRCX), while calling Micron Technology (MU) a bargain at current prices.

Micron shares last week triggered a round-trip sell signal after erasing all gains from the 47.08 buy point of a double-bottom base. They are now slightly below the 50-day moving average, where a show of support is critical to keep the stock from falling further. Intel stock is trying to find support at the 50-day moving average. Lam triggered the 8% sell rule from its 218.58 entry, and the stock is compromised.

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