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New York - Talks between Pfizer and Allergan raised the prospect of a mega-merger in the pharmaceutical industry on Thursday as the broader US stock market finished slightly lower.
The Dow Jones Industrial Average dipped 23.72 points (0.13%) to 17 755.80.
The broad-based S&P 500 slipped 0.94 (0.04%) to 2 089.41, while the tech-rich Nasdaq Composite Index shed 21.42 (0.42%) at 5 074.27.
Allergan jumped 6.0% and Pfizer lost 1.9% after the companies disclosed that they are holding "friendly" discussions on a possible combination. A deal would run north of $100bn in value and be the biggest of the year.
Analysts said investors continued to weigh Wednesday's Federal Reserve policy statement, which opened the door to a possible interest rate hike in December.
Thursday's subdued trade shows investors have become more comfortable with a rate hike, said Michael James, managing director of equity trading at Wedbush Securities.
Goodyear Tire & Rubber lost 4.8% as it reported a 10.2% drop in third-quarter revenues to $4.18bn, below the $4.22bn forecast by analysts.
PayPal fell 1.7% after reporting that third-quarter net income rose 28.6% to $301m. Analysts said the digital payments industry faces rising competition from a wide range of players, including JPMorgan Chase and Apple.
MGM Resorts gained 4.8% as third-quarter profit came in at $66.4m, up from a $20.3m loss in the year-ago period following higher hotel occupancy and casino revenues in Las Vegas.
Companies with large downward moves followings earnings reports included Buffalo Wild Wings (-17.3%), GoPro (-15.2%) and NXP Semiconductors (-19.7%).
But Aetna gained 3.4% after raising its profit forecast and Time Warner rose 3.6% after reporting gains in some key subscription categories.
Bond prices fell. The yield on the 10-year US Treasury rose to 2.18% from 2.09% on Wednesday, while the 30-year advanced to 2.96% from 2.87%. Bond prices and yields move inversely.
