Merck Verdict Weighs on Stocks
Stocks ended an uneasy week mostly higher Friday as a jury verdict against Merck over its painkiller Vioxx erased much of an earlier advance fueled by bargain hunting. The major indexes all suffered losses for the week.
Wall Street pulled back from an initial rally after a Texas court found Merck liable for the death of a man who took Vioxx and awarded his estate more than $250 million in damages. Merck shares dropped $2.35, or 7.7%, to $28.06.
The overall market still managed a small gain as bargain hunters took advantage of recent declines. Positive analyst reports on Coca-Cola and IBM, as well as indications of continued growth in China from Caterpillar, also encouraged investors.
The advance also held despite another jump in crude oil futures, which rose on news of demonstrations in Ecuador that have disrupted oil exports.
A barrel of light crude surged $2.08 to settle at $65.35 in New York trading. But the price remained below the record $66.86 set one week earlier.
The Dow Jones industrial average, up as much as 72 points early in the day, ended 4.30 points, or 0.04%, higher, at 10,559.23.
Broader stock indicators finished mixed. The Standard & Poor’s 500 index gained 0.69 point, or 0.1%, to 1,219.71, while the Nasdaq composite index slipped 0.52 point, or 0.02%, to 2,135.56.
Bonds were little changed, with the yield on the 10-year Treasury note easing to 4.20% from 4.21% on Thursday. It was 4.24% a week ago.
Trading was expected to be volatile during Friday’s session on Wall Street because of the expiration of monthly futures contracts, which often prompts some investors to make shifts in their holdings.
Many other drug stocks fell with Merck. Pfizer, whose painkillers Bextra and Celebrex are similar to Vioxx, lost 33 cents to $25.55. Wyeth closed down 21 cents at $45.89 and Johnson & Johnson slipped 35 cents to $63.57.
In the broader market, winners outnumbered losers by small margins on the New York Stock Exchange and on Nasdaq.
Despite Friday’s gains, stocks were pressured for much of the week by evidence of inflation brought on by higher energy costs, especially after government reports showed big jumps in wholesale and consumer prices during July. The Dow fell 0.4% for the week, the S&P; 500 lost 0.9% and Nasdaq dropped 1%.
Wall Street has languished this month after rallying in July on strong corporate earnings and signs of an economic pickup. Uncertainty about where the market is headed has had investors trading lightly as they grapple with the effects of soaring oil prices amid economic data that remain mostly upbeat.
In other market highlights:
* Dow component Coca-Cola helped fuel the mildly bullish sentiment early in Friday’s session. Brokerage UBS upgraded the stock to “buy” from “neutral,” citing Coke’s stronger marketing efforts and improved sales forecasts. The shares rose 86 cents to $44.39.
* IBM added $1.61 to $82.76 after a report from Prudential Securities that said the company was poised for a strong second half, when clients often increase spending. Prudential analysts also said that IBM was benefiting from cost cutting and that it remained a better pick than rival Hewlett-Packard.
* Caterpillar, also a Dow stock, gained $1.67 to $54.82. The heavy-equipment maker said it signed three nonbinding deals with a government-affiliated industrial developer in China.
* Gap declined 41 cents to $19.74. After the market closed Thursday, Gap lowered its profit estimates for the year because of weaker sales.