John J. Edwards III
Two big consumer-noncyclical companies are locked in a battle for the soul of the
Dow Jones Industrial Average
this midday. "Up!" pushes
Procter & Gamble
. "Down!" pulls
As a result of that clash of titans, the Dow has been poking along with unremarkable gains and losses. Most recently it was mildly off. The broader
was close to break-even and the tech-stuffed
Nasdaq Composite Index
was up a little. The benchmark 30-year Treasury bond was flat.
"The tone of the market had been following the bond market at the open," said Edward Riley, chief investment officer at the
Private Bank at Bank of Boston
. "The rally in bonds is dissipating and so is the rally in stocks."
Procter & Gamble's strength came from Wall Street's enraptured reaction to the company's $1.85 billion cash deal to buy
, maker of
tampons. Procter & Gamble told
it expects no net dilution from the deal and will not take a charge on it.
Merck's weakness came from a slew of downgrades yesterday and today on the drug giant.
all cut ratings on Merck and raised ratings on
. Warner-Lambert's Lipitor cholesterol-lowering drug, co-marketed with
, is seen as a threat to Merck's Zocor.
So does the equity recovery of recent days --
Abby Joseph Cohen
-fueled or not -- mean happy days are here again? Riley thinks not. He said the interest-rate picture remains negative in the short term, profits look like they'll be anemic this earnings season, inflation may rear its seldom-seen head and investors are diving for safe cover.
Riley continues to recommend a general asset-allocation strategy that calls for 60% equities, 35% fixed-income investments and 5% cash -- unlike
strategist Marshall Acuff, who yesterday reportedly shifted his allocation plan to advise more cash (15% versus 10%) and less stock (45% versus 50%). That afternoon call got swallowed up in the late Cohen Effect surge, however.