Market Update: Dow Losing Almost 1% After Merck's Warning
(Updated from 12:48 p.m.)
A profit warning from
Merck
(MRK) - Get Report
this morning has been making the
Dow Jones Industrial Average feel ill today.
The drugmaker warned that slower-than-expected sales for its arthritis-fighting drug Vioxx and foreign exchange problems would result in lower-than-expected second-quarter and fiscal 2001 earnings. Shares of Merck were lately off 7.8% to $68.68. The blue-chip Dow, which counts Merck as one of its components, was lately behind 94.4 points, or 0.9%, to 10,623.
Merck expects second-quarter earnings per share to come in between 77 cents and 79 cents, and its 2001 EPS to be between $3.12 and $3.18. That's lower than the 81 cents a share expected by analysts for the second quarter and the $3.20 a share anticipated for 2001.
The
Nasdaq Composite was lately lower by 11 points, or 0.5%, to 2048; the index has finished in positive territory over the past three days. But despite its recent run-up, earnings warnings are keeping a collar on tech stocks. The
S&P 500, a broader-market measure, was recently lower by about 12 points, or 0.96%, to about 1225.
Over the past few sessions, stocks have traded on the growing expectation the
Federal Reserve will again cut interest rates when it meets next week. Currently,
fed fund futures, a good proxy for monetary policy, are pricing in 100% odds for a 25 basis-point cut and 44% odds of a 50 basis-point cut. Financial stocks, which helped lead the market higher yesterday, were slipping at midday, however.
As for predictions about today's session: "We had such a substantial run-up yesterday where we saw the best volume in well over a month. We might see people taking a break here in the morning," said Jay Meagrow, vice president of trading at
McDonald
. "Every day, you've got a little bit more earnings warnings. Everyone's trying to guess when this bottom occurs."
Last night, Internet security firm
Symantec
(SYMC) - Get Report
cut its revenue and earnings forecasts for the first quarter. It cited weak spending in the consumer and small business areas. It was slumping 33.2% to $40.98.
Elsewhere in the tech sector,
Micron Technology
(MU) - Get Report
was lately trading up 3% to $38.85, after posting a
third-quarter loss from continuing operations of 50 cents a share. But that number included a charge an inventory write-down. That charge, according to the company, was about 40 cents a share, meaning Micron's results came in better than Wall Street expected because analysts exclude most charges in their estimates.
Among tech bellwethers,
Cisco
(CSCO) - Get Report
was up about 1% to $17.85,
JDS Uniphase
(JDSU)
was ahead 9.6% to $12,
Microsoft
(MSFT) - Get Report
was lower by 0.5% to $69.54 and
Intel
(INTC) - Get Report
was up 1.4% to $27.64.
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