Employment Data Aids the Dow; Hiring up, but..
Stocks were mixed Thursday after disappointing Merck(MRK) earnings and a Pfizer(PFE) recall pushed the Dow Jones Industrial Average lower. The Dow Jones Industrial Average was down 11.7 points, or 0.1%, at 12,705, as disappointing news from the two U.S. pharmaceutical giants dragged the index lower. The S&P 500 was rising 1.5 points, or 0.1%, at 1,326. The Nasdaq was up 9.5 points, or 0.3%, at 2,858. Stocks slipped Thursday afternoon as disappointing U.S. corporate news overshadowed optimistic words from Federal Reserve chairman Ben Bernanke.
Merck said growing worldwide sales and favorable exchange rates helped the company report stronger-than-expected earnings in the fourth quarter. The drugs and health care giant said adjusted earnings rose to 97 cents a share on revenue of $12.29 billion as global sales grew 2%. Analysts expected Merck to earn 95 cents a share in the fourth quarter on revenue of $12.53 billion. Merck shares were dropping 0.7% to $38.36.
Pfizer(PFE) followed up a disappointing earnings report Tuesday with more bad news. The pharmaceutical giant, which saw earnings slip 50% in the fourth quarter after losing patent protection on its popular cholesterol drug Lipitor, announced a defect in some of its birth control medications. A manufacturing mix-up that led to some birth control pill packs with the pills out of order is leaving women at risk of unwanted pregnancies, the company announced. Pfizer has recalled about 1 million packets of Lo/Ovral-28 and its generic equivalent. Pfizer shares were down 1.6% at $20.98.
Stocks edged higher in the morning as Bernanke said the U.S. economy has showed continued signs of improvement, but remains vulnerable to shocks. The chairman, speaking before the House Budget Committee in Washington, encouraged the committee to reduce the U.S. budget deficit to further bolster the country’s situation.
“Fortunately, over the past few months, indicators of spending, production, and job-market activity have shown some signs of improvement,” Bernanke said, according to a prepared statement. “The outlook remains uncertain, however, and close monitoring of economic developments will remain necessary.”
Ahead of Friday’s monthly unemployment report, outplacement firm Challenger Gray & Christmas reported that U.S. companies planned to cut 53,486 jobs in January, a 28% increase over the 41,785 jobs cuts announced in December.
Also before Friday’s figures, the Labor Department said that 367,000 Americans filed for initial jobless claims in the week ended Jan. 28. The latest reading was below the estimated 375,000, according to Thomson Reuters, and down 12,000 from the previous week’s figure of 379,000. A measure of workers’ productivity in the fourth quarter increased at an annual rate of 0.7%, according to the Labor Department. The latest increase was slower than the 2.3% annualized rise in the prior quarter but in line with economists’ forecast.
Social networking giant Facebook filed on Wednesday to raise $5 billion in what will be the largest Internet initial public offering on record. The social media company didn’t reveal in its regulatory filing the number or price of shares it will offer. However, the dual class structure of the stock implies that the company’s offering for retail investors will be less attractive than expected.