RIMM Falls 4%–Here’s Why
Stocks were mixed after
Merck dropped a bomb.
Merck
(
MRK |
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Chart |
News |
PowerRating) will withdraw its arthritis drug VIOXX, effective
immediately, citing risk of heart disease. 2003 sales were $2.5 billion and the
effect of EPS is anticipated to be $0.50-$0.60. In Q4, Merck estimated they lost
between $700-$750 million in sales on the drug. VIOXX is the company’s second
largest selling drug. A study indicated that patients taking VIOXX had a 50%
greater chance of heart attack. Shares of MRK gapped down. Large block trades
are going off on MRK–average trade 60,000-70,000 shares.
Pfizer
(
PFE |
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Chart |
News |
PowerRating) gapped up on the news.
Pfizer has a competing drug, Celebrex. PFE gapped higher and sold off to
near-unchanged.
For the Dow and S&P, Q3 is worst performance
since Q1 2003. For Q3, semiconductors lost 20%.
After the close, Research in Motion
(
RIMM |
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Chart |
News |
PowerRating)
beat by 0.02 but said Q3 revenue would be lighter than expected and the stock
traded down. NetFlix
(
NFLX |
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PowerRating) and TiVo
(
TIVO |
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PowerRating) said they
will work together to develop a digital movie downloading service.
| Dow | -55.97 | 10080.27 |
| S&P 500 | -0.22 | 1114.58 |
| Nasdaq | +2.90 | 1886.84 |
Strong sectors were: Healthcare
Payors
(
HMO.X |
Quote |
Chart |
News |
PowerRating) +12.73%, CyclicalsÂ
(
XCI.X |
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Chart |
News |
PowerRating) +7.74%,
Oil
(
XOI.X |
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Chart |
News |
PowerRating) +4.16%.
Weak were: Healthcare
(
HCX.X |
Quote |
Chart |
News |
PowerRating) -6.65%, Consumer
(
CMR.X |
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Chart |
News |
PowerRating) -8.06%.
10-year Notes were -050 at 112 200
The dollar
was -0.58 at 87.41.
Gold was +7.20 at 418.30
Crude Oil was +0.09 at 49.64
1.68 billion on the Nasdaq.
Market breadth was positive.
| NYSE | Issues | |
| Advancing | 1981 | Up Vol 1057 |
| Declining | 1321 | Down Vol 667 |
| Ratio | 1.49 | 1.57 |
| Nasdaq |
||
| Advancing | 1738 | Up Vol 994 |
| Declining | 1332 | Down Vol 661 |
| Ratio | 1.30 | 1.50 |
Stocks in the News
IBM will take a $320 million charge in Q3.
Amkor
(
AMKR |
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Chart |
News |
PowerRating) cut its outlook.
Actuant
(
ATU |
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News |
PowerRating) beat estimates.
Pepsi’s
(
PEP |
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Chart |
News |
PowerRating) profit rose and the company guided higher.
Brice Wightman