Stocks edged higher yesterday as investors fled pharmaceutical names after bad news about two drug giants and moved money into software, semiconductor and home-building issues.

Financials also suffered after American Express announced a cut of up to 6,500 jobs and $280 million in charges as the aftershocks from the September 11th attacks curbed corporate spending and travel. Amex shares fell 84 US cents, or 2.45 per cent, to $33.42.

Drug giant Merck & Co fell sharply, adding to huge losses a day earlier when it warned its earnings growth would dry up next year due to slowing sales and patent expirations. The shares were the second-most active on the New York Stock Exchange, falling $2.18 or 3.6 per cent, to a 20-month low of $58.52.

Further gloom in the normally safe-haven sector came in the form of a legal broadside filed against Bristol-Myers Squibb. The stock fell $3.30, or 6.1 per cent, to $50.45. Merck and Bristol Myers contributed to a 1.2 per cent decline in the US pharmaceutical index to a low unseen since late September.