Dow Morning Report: Merck Gets Pressured, Chevron (sort of) Celebrates, and Boeing Waits

Dow Morning Report: Merck Gets Pressured, Chevron (sort of) Celebrates, and Boeing Waits

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

The Dow Jones Industrials continues to oscillate near all-time highs, extending yesterday's losses with a further drop of about 42 points just before 11 a.m. EST. Concerns about China's future economic direction and a potential tightening of monetary policy in the U.K. cast a shadow over the U.S. markets this morning. At home, stock-specific news dominated macroeconomic factors in this morning's trading, with Merck , Chevron , and Boeing all slightly lower.

Merck has dropped 1%, with investors weighing the potential impact on the company of new guidelines from the American Heart Association and the American College of Cardiology. The guidelines cover recommendations on how to control cholesterol levels, and the recommended course of treatment favors greater use of statin drugs over other types of drugs, including Merck's Zetia and Vytorin. If doctors follow this advice, it will lead to more use of generic statins and less revenue for Merck from its cholesterol drugs. Yet that's far from a foregone conclusion, as many doctors have focused on reaching targeted levels for low-density lipoprotein counts for years and might be less comfortable with the weaker emphasis on specific LDL targets in the guidelines.

Chevron has fallen a quarter-percent as it continues to fight over an Ecuadoran court judgment in connection with alleged environmental contamination in the South American country. Even as the oil giant fights in U.S. court against the enforceability of the $19 billion judgment, Ecuador's highest court affirmed the verdict of the lower court but reduced the judgment amount by half to $9.5 billion, eliminating an initial doubling of the original ruling for punitive damages. Legal experts are uncertain to what extent Ecuador's ruling will affect deliberations in the U.S. court case, but Chevron might have to wait a long time before it gets a final answer from all concerned.

Boeing has declined 0.6% as it waits to see how its machinists' union will vote on extending its contract with the aerospace giant. Boeing has said that it needs the eight-year extension in order to guarantee being able to build its 777X model within the state of Washington. Meanwhile, some union members aren't happy with Boeing's demands for concessions on pension and health-insurance benefits. Without a resolution, Boeing might have to shift 777X production plans elsewhere.

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