Why Drug Makers Are Under Pressure Today
Drug
makers are under pressure as Johnson & Johnson
(
JNJ |
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PowerRating),
-4.73% at 555.73, has been downgraded by USB Piper Jaffray to “outperform” from
“strong buy” based on valuation and the perception that investor sentiment has
ignored risks specific to the company’s business. Also,
Merck
(
MRK |
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PowerRating),
-4.89% at 43.75, has been downgraded by Raymond James to “market perform” from
“strong buy” based on the belief that the company will issue an earnings warning
by December. And Abbott Labs
(
ABT |
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PowerRating), +3.29% at 40.76, reported
third-quarter earnings in line with expectations, though said it will lay off 3%
of its workforce.
The Dow and S&P 500 are
decidedly underwater at mid-day, while the Nasdaq has been wavering around the
unchanged level. Goldman Sach’s Abby Joseph Cohen put a dent in sentiment before
the open, when she revised her outlook for the Dow and S&P 500 lower for the
next 12-months. Further profit warnings and downgrades have also added to the
day’s selling.Â
The Dow Jones Industrial
Average
(
$INDU.X |
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PowerRating) is -2.72% at 7296.04. The S&P 500
(
$SPX.X |
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PowerRating)
is -2.40% at 779.35. The Nasdaq
(
$COMPQ |
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PowerRating) is -0.83% at 1119.75.
The biggest advancers are in
semiconductors, Internet, gold and silver, and software.
The biggest losers are in
airlines, utilities, transportation, and forest and paper.
U.S. Treasury Bonds are
+’20 at 114 ’15.
The Dollar is -1.09 at
107.40.
There are no economic releases
today.
The biggest Dow gainer is
Intel Corp.
(
INTC |
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PowerRating), +2.64 at 13.57.
Leading the Dow down are:
General Motors
(
GM |
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Chart |
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PowerRating), -6.93% at 31.27, as it
had its price
target cut by Lehman Brothers to $38 from $41, though maintained its “equal
weight” rating;” Boeing
(
BA |
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PowerRating),
-6.12% at 30.05; and General Electric
(
GE |
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PowerRating), -6.20% at 21.90, which had
its 2003 earnings estimates cut by Morgan Stanley to $1.70 from $1.79 a share.
Other
stocks in the news:Â Â Â
Airline stocks were under pressure, as CSFB lowered
its rating on the sector to “market weight” from “overweight.. ARR Corp
(
AMR |
Quote |
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PowerRating),
-11.98% at 3.45, was downgraded to “neutral” from “outperform.”
Also hit with with a profit estimate reduction was
broker Merrill Lynch
(
MER |
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PowerRating), -4.41% at 28.58, as Bank of America sees
revenue weakness. Also in the sector, Morgan Stanley
(
MWD |
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PowerRating), -4.42% at
28.58, and Lehman Brothers
(
LEH |
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PowerRating), .
Gaming company Argosy Gaming
(
AGY |
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PowerRating), -1140% at 17.55, has warned that its third quarter earnings will be
$0.63-$0.65 per share vs. the Multex consensus of $0.72.
Regional bank SunTrust Banks
(
STI |
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News |
PowerRating), -3.74% at 52.40, has missed its third-quarter earnings expectations
by $0.01, with profits of $1.20 per share.
Retailer Gymboree
(
GYMB |
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Chart |
News |
PowerRating),
+2.29% at 16.96, has raised its earnings outlook to $0.15-$0.17 a a share from
previous estimates of $0.13-$0.15 a share.
Food company General Mills
(
GIS |
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PowerRating), -2.91% at 42.92, was downgraded by CSFB to “neutral” from
“outperform.” Â