Friday: Drug Stocks, Box Makers a Drag

By John J. Edwards III
Staff Reporter

The markets find themselves in a cloudy muddle at midday, with the major indices pushing deeper into record territory only to pull back.

Merck

(MRK) - Get Merck & Co., Inc. (MRK) Report

is leading the

Dow Jones Industrial Average

lower, off more than 2 points on reactions to

Pfizer's

(PFE) - Get Pfizer Inc. Report

announcement that it expects single-digit earnings growth in the second half. Pfizer itself was down more than 3 to about 58 1/2, and

Eli Lilly

(LLY) - Get Eli Lilly and Company (LLY) Report

,

Bristol-Myers Squibb

(BMY) - Get Bristol-Myers Squibb Company Report

and Dow component

Johnson & Johnson

(JNJ) - Get Johnson & Johnson (JNJ) Report

were similarly injured.

Over on the

Nasdaq

, it's the computer stocks' turn to fall off a cliff even as

Microsoft

(MSFT) - Get Microsoft Corporation (MSFT) Report

rebounds from recent losses.

Dell

(DELL) - Get Dell Technologies Inc Class C Report

, which closed last Friday at 149 1/8 and rocketed to an amazing 169 7/8 by yesterday, plunged as deep as 160 before noon as investors snapped up their profits.

The standout computer stocks of the

New York Stock Exchange

, which strongly affect Nasdaq trading, were off sharply as well:

Compaq

(CPQ)

down 4 15/16 to 135 15/16,

Gateway 2000

(GTW:NYSE) down 3 to 40 3/16 and

IBM

(IBM) - Get International Business Machines (IBM) Report

down 1 11/16 to 106 1/8. Gateway, which reported in-line second-quarter earnings late

yesterday, suffered a downgrade to market performer from buy at

J.P. Morgan Securities

on price and earnings-growth criteria.

One market analyst said he thinks the bull run may be slowing down, getting ready to retrench as it did in March and April. "Except for the interest rates, pretty much everything's in place to have a correction," he said. "It's very frothy here. Relatives are asking me about some stock that's in a first-stage trial that they want to buy."

Low interest rates are all that's keeping the market from falling into a truly bearish hibernation, the analyst said. With the yield on the benchmark 30-year Treasury bond around 6.50%, however, we may be in store for just a 5% to 10% correction, he said.