Pfizer and Merck Jump; Payments Stocks Decline

An agreement with the U.S. government and a favorable regulatory decision in Europe helped lift shares of large drugmakers. Meanwhile, the announcement of a collaboration that will integrate shopping functions into a popular chatbot dragged on several financial technology firms.

Major U.S. equities indexes reversed early losses to eke out slight gains on the final trading day of the third quarter as investors braced for a federal government shutdown set to kick in overnight. The Dow gained 0.2% to close at a record high, while the the Nasdaq rose 0.3% and the S&P 500 added 0.4%. See here for a full market roundup from Investopedia.

Pfizer (PFE) shares jumped 6.8%, logging the S&P 500’s best performance on Tuesday, after the White House said it has reached a deal for the drugmaker to sell its products at lower prices to Medicaid patients. The company is set to receive a three-year exemption from certain tariffs that the administration intends to impose on pharmaceutical imports. President Trump also announced the launch of a website that will allow U.S. consumers to purchase prescription drugs directly from the federal government. Pfizer CEO Albert Bourla appeared alongside Trump as he made the announcements.

Shares of Merck (MRK) also surged 6.8%. The pharmaceutical giant received a positive recommendation from regulators in Europe for a product aimed at preventing respiratory syncytial virus, or RSV, in newborns and infants. Separately, Merck announced a drug discovery partnership with Canada’s Variational AI. 

Other stocks with exposure to the U.S. pharmaceutical industry were among the top performers in the benchmark index Tuesday. Shares of Charles River Laboratories (CRL), Bio-Techne (TECH), and IQVIA Holdings, (IQV), which provide services to support drug discovery and development processes, also gained, along with Eli Lilly (LLY).

Shares of Albemarle (ALB), the world’s largest lithium producer, dropped 6.7%, losing the most of any stock in the S&P 500, after environmental regulators in Chile fined the company for violations at its operations in the Atacama salt flat. With the move lower on Tuesday, Albemarle stock gave back gains posted over the past week following reports that the U.S. government might acquire a stake in Lithium Americas (LAC), a fellow producer of the key battery component.

Shares of several companies in the payments business came under pressure after OpenAI announced a partnership with Stripe that will allow users to purchase items directly through ChatGPT. The move toward including shopping features within the popular chatbot could prove disruptive to payments, e-commerce, and search-based online ad markets. Shares of payment processors Paycom Software (PAYC) and Block (XYZ) were down more than 4%.

Shares of credit card issuers also lost ground as the likelihood of a government shutdown increased. A shutdown could have a negative impact on consumer sentiment, weighing on the frequency of the card swipes and other transactions that generate revenue for the credit card companies. Shares of Capital One Financial (COF) sank close to 5%.