The Wall Street Journal-20080115-IBM Drives Dow-s Gain- Merck Falls
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IBM Drives Dow's Gain; Merck Falls
Stocks bounced higher as International Business Machines revived hopes that overseas markets would soften the blow of a domestic slowdown for big tech stocks and other multinationals.
But the threat of a recession loomed large for other sectors, as Sears Holdings and Sovereign Bancorp joined a cavalcade of retailers and financial-services firms reporting problems with consumers' spending and borrowing.
Shares of IBM rose $5.26, or 5.4%, to $102.93, contributing to the Dow Jones Industrial Average's 171.85-point gain. It posted preliminary fourth-quarter profit surpassing the Wall Street target. Among other tech stocks, chip maker Intel, which reports earnings today, rose 1.09, or 5%, to 23.08 on Nasdaq.
Hewlett-Packard, which does more than half its business outside the U.S., rose 1.13, or 2.5%, to 46.13. Microsoft (Nasdaq) rose 48 cents, or 1.4%, to 34.39.
American depositary shares of German software maker SAP rose 2.02, or 4.2%, to 50.03 after SAP reported brisk revenue growth in core businesses.
Two drug stocks were among the four decliners on the Dow -- both in conjunction with developments on cholesterol-control drugs.
Merck fell 77 cents, or 1.3%, to 59.78. Cholesterol drug Vytorin, which Merck markets jointly with Schering-Plough, fared no better than a generic in slowing down artery clogging for patients in a clinical trial. Schering-Plough fell 2.21, or 8%, to 25.52.
Pfizer dipped five cents to 23.97. A review of data indicated that taking the pharmaceutical company's cholesterol drug Lipitor lessened heart-attack chances for new statin users. Separately, however, the U.S. patent office warned it may reject claims on Pfizer's Lipitor patent.
Still, some biotechs stirred.
Biogen Idec (Nasdaq) rose 96 cents, or 1.6%, to 59.98. The Food and Drug Administration approved the multiple sclerosis drug Tysabri for bowel condition Crohn's disease in certain patients. Tysabri is a joint venture between Biogen and Elan, whose American depositary shares tacked on 13 cents to 24.89.
WellCare Health Plans surged 9.44, or 20%, to 56.43 after the health insurer said it received federal contract renewals from a number of state Medicare and Medicaid service centers. WellCare's shares fell late last year after a federal inquiry into allegations about its Florida Medicaid program.
Consumer-discretionary stocks remained under pressure.
Sears Holdings (Nasdaq) fell 4.79, or 5%, to 91.38. The operator of Sears and Kmart stores warned that its fiscal fourth-quarter profit would undershoot prior expectations. Among other retailers, Wal-Mart Stores shed five cents to 47.67.
Harman International Industries plunged 25.97, or 38%, to 43 after the maker of car radios and other electronics -- whose leveraged- buyout purchasers backed out of the deal recently -- cut its fiscal 2008 profit projection, citing pricing on global-positioning devices for cars.
Sovereign fell five cents to 10.63 after warning it would book charges related to weakening consumer credit and quitting certain auto-lending businesses.
CIT Group fell 92 cents, or 3.8%, to 23.60. On Friday, the commercial lender warned it will post a fourth-quarter loss as it boosts provisions for bad loans.
Citigroup, which reports today, added 50 cents, or 1.8%, to 29.06.
Merrill Lynch rose 1.28, or 2.3%, to 55.97. The Financial Times reports the brokerage is seeking about $4 billion in another capital- raising round.
