Today's Market: Dow Hit by Merck's Warning; Tech Stocks Idle - TheStreet

Today's Market: Dow Hit by Merck's Warning; Tech Stocks Idle

Wall Street contends with new earnings warnings. But Nortel and JDS Uniphase are among the gainers this morning.
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(Updated from 9:49 a.m. EDT)

More dark earnings outlooks from the tech and pharmaceutical sector are weighing on stocks this morning, leaving blue-chips down and tech stocks flat.

The

Dow Jones Industrial Average was flat until trading began for

Merck

(MRK) - Get Report

, which warned this morning. Lately, the Dow was down about 48 points to 10,668; the

Nasdaq Composite Index was up 7.5 points to 2066; and the

S&P 500, which tracks the broader market, was down 4.5 points to 1233.

With little earnings or economic news on tap for today, investors are digesting the latest evidence corporate earnings are still in the doldrums. Thursday's after-hours trading was abuzz with the latest warnings from yet more tech firms, particularly in the software sector. Tech stocks are dominating list of companies that have preannounced bad news during this confession season.

The latest big-name company to come out with bad news was firmly in the nontech world, however. Drug company Merck this morning said slower-than-expected sales of its drug Vioxx as well as foreign exchange problems would hit its second-quarter and full-year performance. The stock was slipping 8.3% to $68.30 so far this morning.

"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."

The major market averages closed in the green again yesterday. After a weak and directionless morning, investors looked on the bright side of some better-than-expected economic data and traded on the growing expectation that the

Federal Reserve will again cut interest rates when it meets next week. The Dow gained 68.1 points, or 0.64%, to 10,715.43, while the Nasdaq Composite racked up 27.5 points, or 1.4%, to close at 2058.7. The S&P 500 added 1.1%. Stocks were also helped by words from

Cisco Systems

(CSCO) - Get Report

, which said its quarterly revenue would be in line with previously reduced expectations. Cisco was up this morning by 3.1% to $18.22.

Yet profit concerns remain. Stocks, particularly tech names, have pulled back from their festive spring rally and are struggling to keep their recent gains amid the steady drumbeat of confessions.

One that grabbed sellers by the collar last night was Internet security firm

Symantec

(SYMC) - Get Report

, which cut its revenue and earnings forecasts for the first quarter. It cited weak spending in the consumer and small business areas. It was tumbling 27.8% to $44.26 in early trading. And software firm

Manugistics

(MANU) - Get Report

was losing 23.3% to $27.92 despite

meeting consensus estimates for its fiscal first quarter. The company earned 3 cents per share on $89.8 million in revenue, but many were anticipating that the company would turn in bigger numbers.

Micron Technology

(MU) - Get Report

after the close announced a

third-quarter loss of $313 million, including a $260 million inventory writedown. It lost 53 cents a share vs. a 47 cent profit in the year-ago quarter. Analysts had expected a 15 cent loss -- but that didn't count the writedown. Micron was trading higher by 3.2% to $38.89.

Ciena

(CIEN) - Get Report

shrugged off preopen losses for reportedly being interested in buying

Lucent's

(LU)

fiber-optic cable unit. Lately, Ciena was up 4.5% to $41; Lucent was up, too, higher by 3.6% to $5.79. Cisco,

JDS Uniphase

(JDSU)

and

Nortel

(NT)

were also among the early gainers.

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Bonds/Economy

Treasuries were rising this morning. The benchmark 10-year

Treasury note was up 2/32 to 98 23/32, lowering the yield to 5.168%. Yields and prices move in opposite directions. The 30-year Treasury bond was up 5/32 to 96 18/32, yielding 5.614%.

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International

European markets were mixed, with strength in bank stocks. The

FTSE 100

inched up 0.9, or 0.02%, to 5642.3, and the Paris

CAC-40

rose 34.76, or 0.68%, to 5169.73. Frankfurt's

Xetra Dax

was slipping 13.95 points, or 0.23%, to 5912.53, after an influential business survey showed that German business confidence fell to a two-year low in May with little prospect of recovery in Europe's biggest economy.

The euro was lately trading lower at $0.8527. The greenback was higher to 124.06 yen.

Asian markets closed mixed overnight. Tokyo's

Nikkei 225

closed up 82.18, or 0.63%, to 13044.61. But Japanese bank stocks remained weak amid concerns about loan quality. Hong Kong's

Hang Seng

fell 13.43, or 0.10%, to 13174.02.

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