Dow on Track to End the Week Lower

After a tumultuous Tuesday, in which the Dow Jones Industrial Average (INDEX: ^DJI) fell over 240 points, it appears set to end the week with a whimper. In a relatively quiet day with respect to economic data and earnings releases, the blue chip index is down a mere 32 points in intraday trading.

The only Dow component to release earnings this morning was Merck (NYS: MRK) . The pharmaceutical company reported earnings of $0.95 a share, excluding one-time items. While this beat the consensus estimate of $0.93, top-line sales fell 4% and came in slightly below analysts' expectations.

According to the company's chief executive officer, Kenneth C. Frazier:

Our strong global sales this quarter offset the impact of the SINGULAIR patent expiry in the U.S. We will continue to drive value for our customers and shareholders through Merck's four-part strategy of executing on our core business, expanding geographically in high-growth markets, extending our complementary businesses and excelling at managing our costs while investing for growth. With our robust pipeline, we remain on target to submit multiple new products for marketing approval between now and the end of 2013.

Merck's bottom-line beat and top-line miss are roughly in line with the overall trend we're seeing this earnings season. According to data compiled by Bloomberg, earnings at 71% of S&P 500 (INDEX: ^GSPC) companies beat analysts' estimates, while sales beat only 41% of the time.

Quite simply, while companies can control their bottom lines through expense reductions, they have less sway over their customers. This trend has been particularly robust at technology companies. Earlier in the year, for example, Intel (NAS: INTC) lamented that a deterioration in demand for its products caused it to temper forward guidance, noting that "the company is seeing customers reducing inventory in the supply chain versus the normal growth in third-quarter inventory."

In slightly more upbeat news, data released this morning by the Commerce Department showed that U.S. economic growth picked up in the third quarter. Between July and September, the U.S. economy grew at an annualized pace of 2%. Economists polled by The Wall Street Journal had expected the figure to come in closer to 1.8%.

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