Sellers Crash Bulls' Party

In corporate news, medical-device maker Guidant(GDT Quote) is back in the arms of Johnson & Johnson(JNJ Quote), with its board recommending shareholders accept a takeover offer worth $23.2 billion, or $68.06 a share. Guidant lost 4 cents, or 0.1%, to $70.40.

Rival suitor Boston Scientific(BSX Quote) says it's still in the hunt for Guidant. It previously offered $25 billion, or $72 a share, for the company and vowed to "vigorously pursue" the transaction. Boston Scientific was off 36 cents, or 1.4%, to close at $25.05.

Laurels continue to be laid on Apple(AAPL Quote) after its blowout business update on Tuesday. Bear Stearns upgraded the stock to outperform and set a $105 price target, about 25% above Wednesday's $83.90 close. Apple rose 39 cents, or 0.5%, to $84.29.

Mylan Labs(MYL Quote) rose Thursday on an agreement to license its experimental blood processing drug nebivolol to Forest Labs(FRX Quote). Mylan will collect $75 million upfront and stands to see future royalties. Mylan was up 34 cents, or 1.7%, to finish at $20.84.

Research In Motion(RIMM Quote) announced support Thursday for two Google(GOOG Quote) protocols, the Google Talk instant message program and Google Local, a maps-and-directions service. Both will be available on BlackBerry. RIM tacked on $1.28, or 1.8%, to $69.90.

According to a report in the New York Post on Thursday, the Securities and Exchange Commission has begun an informal investigation into allegations that Home Depot(HD Quote) inflated profits by overcharging suppliers for damaged merchandise. Home Depot denies the charge but said it will cooperate with the investigation. Shares were off 40 cents, or 0.9%, to close at $42.55.

In other ratings moves, Prudential upgraded AT&T(T Quote) to overweight from neutral, assigning a stock price target of $27. The move comes in anticipation of the company's analyst day, scheduled for the end of January. AT&T dipped 11 cents, or 0.4%, to $24.96.

Dow components Coca-Cola(KO Quote) and J.P. Morgan(JPM Quote) finished lower after both faced downgrades before the bell. Goldman Sachs downgraded Coca-Cola to in-line from outperform, while Piper Jaffrey cut J.P. Morgan to market perform from outperform.

Coca-Cola was lower by 23 cents, or 0.6%, to $41.44. J.P. Morgan lost 75 cents, or 1.8%, to $39.95.

The airline sector faced pressure Thursday after Southwest Airlines(LUV Quote) was downgraded to hold at Citigroup and US Airways(LCC Quote) was cut to peer perform at Bear Stearns. Southwest fell 39 cents, or 2.3%, to $16.36. US Airways was up 18 cents, or 0.5%, to close at $34.98.

The Amex Airline index lost 1.9%. The biggest decliner on the index was Alaska Air(ALK Quote), sliding 3.5%.

Overseas markets were mostly higher, with London's FTSE 100 unchanged 5733 and Germany's Xetra DAX up 0.2% to 5542. In Asia, Japan's Nikkei rose 0.5% overnight to 16,445, while Hong Kong's Hang Seng added 0.4% to 15,719.