(By Salman - iStockAnalyst Writer)US stocks edged higher on Monday after drug giant Pfizer announced that it has agreed to acquire rival Wyeth in a $68 billion deal. Earlier, stocks fluctuated wildly between gains and losses as a number of companies announced big layoffs.

The Dow Jones Industrial Average rose 38.47 points or 0.48% to finish at 8,116.03. The S&P 500 increased 4.62 points or 0.56% to 836.57. The Nasdaq Composite added 12.17 points or 0.82% to end at 1,489.46.

Equipment maker Caterpillar Inc. (NYSE: CAT) plummeted $2.99 or 8.38% to $32.67 after it announced that its fourth quarter profit tumbled 32% to $661 million, or $1.08 a share from $975 million, or $1.50 a share, in the same quarter a year ago. Quarterly revenue rose 6% to $12.92 billion. The company also said that it will slash 20,000 jobs, which includes 12,000 employee positions and 8,000 contractors.

The world's largest drugmaker Pfizer Inc. (NYSE: PFE) said early on Monday that it has agreed to buy rival Wyeth (NYSE: WYE) in a $68 billion cash-and-stock deal. Pfizer lost over $1.80 or 10.32% to $15.65.

McDonald's Corp.'s (NYSE: MCD) reported that its fourth-quarter net income declined 23% to $985.3 million, or 87 cents a share, from $1.27 billion, or $1.06 a share. Sales fell 3.3% to $5.57 billion.

Oil giant Halliburton Co. (NYSE: HAL) announced that its fourth quarter net income plunged to $468 million, or 53 cents a share, from $690 million, or 75 cents a share in the year-ago period. Shares of the company rose 62 cents or 3.40% to $18.87.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) rallied $2.13OR 9.34% to $24.94 after it reported a loss of $13.9 billion, or $36.78 a share compared to a profit of $414 million, or $1.05 a share in the corresponding quarter a year ago. Excluding one time charges, the company earned $23 million, or 6 cents a share. Quarterly sales dropped to $2.07 billion from $4.18 billion last year.

Kimberly-Clark Corp. (NYSE: KMB) reported a fall of 8.1% in quarterly earnings while Tyson Foods (NYSE: TSN) said that it swung to a loss in fiscal first quarter.

The third-largest US wireless provider Sprint Nextel Corp.(NYSE: S)  rose 3 cents or 1.22% to $2.49 on Monday after it said that it plans to eliminate 8,000 jobs in the first quarter in order to cut annual costs by $1.2 billion. Shares of home improvement retailer Home Depot Inc. (NYSE: HD) jumped rose $1.01 or 4.65% to $22.73 after it said that it will cut 7,000 jobs.

Shares of specialty chemical maker Rohm & Haas (NYSE: ROH) plunged $8.72 or 13.25% to $57.10 after it said that Dow Chemical (NYSE: DOW) does not plan to close the pending acquisition.

Financial stocks finished with losses. Shares of Citigroup (NYSE: C) fell 14 cents or 4.03% to $3.33. Bank of America (NYSE: BAC) decreased 24 cents or 3.85% to $6.

Diversified firm General Electric (NYSE: GE) surged 39 cents or 3.24% to $12.42.

According to National Association of Realtors existing home sales increased 6.5% to an annual rate of 4.74 million in December. A report by Conference Board showed leading indicators rose 0.3% in December.

European stocks rallied. The U.K. FTSE gained 156.64 points or 3.86% to  
4,209.01. The German DAX and French CAC climbed 3.54% and 3.72% respectively.

Asian stocks finished with minor losses. The Nikkei 225 fell 63.11 points or 0.81% to 7,682.14. Hong Kong's Hang Seng Index dropped 7.39 points or 0.63% to end at 12,578.60.

NYMEX Crude Oil for March delivery declined 74 cents, or 1.6%, to settle at $45.73 a barrel.

Disclosure: Author does not own any of the stocks discussed here.