The Dow Jones Industrial Average is back above 14,000 for the first time since 2007, and the S&P 500 has settled above 1,500 today, another important milestone. A fairly strong employment report gave bulls the boost they needed today, pushing the Dow up 1% and lifting the S&P 500 0.94%. All but three of the 30 Dow components are up, so the gains are widespread across all industries.
The jobs report from January showed 157,000 jobs added to the economy, but when added to upward revisions of 86,000 in November and 41,000 in December, total job-creation looked pretty strong. The unemployment rate did move a tick higher to 7.9%, but that also reflects more people coming back into the job market.
Telecommunications companies AT&T and Verizon are helping to lead the Dow today, climbing 2.1% and 2.3%, respectively. Verizon was upgraded from "neutral" to "overweight" by analysts at Piper Jaffray. Further, AT&T and Verizon are both learning how to squeeze more profits out of wireless subscribers, and if more people are employed, it will put these companies in a better position to provide great returns going forward.
Drugmaker Merck tried to rain on the Dow's parade today, falling 3% after announcing earnings. Fourth-quarter revenue declined 4.5% to $11.7 billion, and earnings fell 7.3% to $1.4 billion as generic drugs ate into profits. The results weren't entirely surprising, but investors were disappointed by further delays in an osteoporosis medicine until next year. Merck wants results of a second large study before bringing the treatment before regulators. The decline in financial results is expected to continue next year as generics take more share, and investors should be wary of Merck and other pharmaceutical companies.
For nearly 100 years, Merck's cutting-edge research has led to a number of medical breakthroughs. Today, however, this pharma stalwart is staring down a steep patent cliff and facing generic competition for its top-selling drug. Will Merck crumble under its own weight, or will it continue to pay dividends to investors for another century? To find out whether this pharma giant has the stamina to keep its Bunsen burners alight, grab your copy of our brand-new premium research report today. Our senior biotech analyst, Brian Orelli, Ph.D., walks you through both the opportunities and threats facing Merck, and the report comes with a full 12 months of updates. Claim your copy now by clicking here.
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