Merck Contributes to Weak Opening

Elena
13 Sep, 2006
New York City

U.S. stocks opened lower to turn mixed shortly afterwards on negative news from Merck and recovering oil prices after seven sessions of steep losses. Shares of Merck fell more than 2% after two new studies indicated that withdrawn pain reliever Vioxx carries an increased risk of kidney and heart arrhythmia problems.

[R]09:45AM Stocks opened lower on rising oil, Merck, Lehman Bros.[/R]
U.S. stocks opened in the negative, reversing from a strong rally Tuesday when the Dow Jones industrials rose more than 100 points. Negative news from Merck & Co., a decline by the shares of Lehman Brothers Holdings Inc, as well as an upward move by the price of oil generated some negative sentiment. Recently stocks have turned mixed.

After ending the previous session at a five-month closing low, crude futures rose to $64.25 a barrel sending energy stocks higher. Shares of Merck ((MRK)) fell more than 2% after two new studies indicated that withdrawn pain reliever Vioxx carries an increased risk of kidney and heart arrhythmia problems. Lehman Brothers slipped after reporting a better-than-expected Q3 profit despite a slowdown in its investment-banking business. Lehman Brothers ((LEH)) reported Q3 profit increase to $916 million, or $1.57 a share from $864 million, or $1.47 a share last year, supported by higher trading revenue. The company's revenue in the quarter totaled $4.18 billion, compared to $3.85 billion. Company’s quarterly results exceeded expectations of 1.50 a share, on revenue of $4.01 billion. In the first hour of trading, the Dow Jones industrial average fell 2.24, or 0.02%. The Standard & Poor''s 500 index rose 0.68, or 0.05%, and the Nasdaq composite index gained 4.83, or 0.22%.


[R]8:15AM Stock futures were mixed ahead of Lehman Bros earnings.[/R]
Stock market futures traded mixed Wednesday, with investors awaiting third-quarter earnings release by investment-banking giant Lehman Brothers. Lehman Brothers ((LEH)) is due to report Q3 earnings, following Goldman Sachs results announced Tuesday. Analysts expect Lehman to report net income of $1.49 a share.

Automaker Ford ((F)) will be another company in focus after reports it is planning to cut its white-collar costs by nearly a third. Hewlett-Packard ((HPQ)) is also expected to draw some attention as a California''s Attorney General said he had enough evidence for indictments inside and outside the company. Lehman Brothers upgraded the Gap Inc. ((GPS)) to overweight from equal-weight. The broker told clients that unless same-store sales improve, a management change could happen before the end of the contract of the present CEO. BP ((BP)) gained 0.7% in London on news that the company is close to a deal with the Department of Interior that would help resolve the agency''s worries about flawed Gulf of Mexico drilling leases. Dow Jones futures were recently down 10 points, S&P futures slipped 1.5 points, while Nasdaq futures climbed 2 points.


[R]7:30AM Asian markets close higher on chip-makers and property stocks.[/R]
Asian markets finished higher on Wednesday. The Nikkei 225 Average finished the day 0.2% higher at 15750.05. Stocks in Tokyo closed mixed as a strong showing amid the export-oriented technology sector failed to counter declines in commodity companies. Elpida Memory advanced 6.6%, and Sumco gained 5.2%. On the other hand, selling pressure on consumer finance stocks continued, as Takefuji lost 3.4% and Aiful sank 3.3%.

Hong Kong Hang Seng Index gained 0.79% to close at 17210.04. shares ended higher for the second straight session. HSBC closed 0.7% higher, and China Mobile rose 1.2%. South Korea Kospi Index advanced 0.38% to 1333.13. Hynix Semiconductor advanced 3.1% on the company positive fundamentals and stabilizing memory chip prices. Transport shares rose on a sustained fall in oil prices, as Hyundai Merchant Marine rose 0.9% and Asiana Airlines climbed 1.6%.

Taiwan gained 0.59% to 6664.87. Stocks tracked Wall Street, with food companies leading after Uni-President Enterprises was chosen as a sponsor of the 2008 Beijing Olympics. Australia S&P/ASX 200 closed 0.86% higher at 5017.20. The stock market reversed two days of heavy losses with share-price gains tempered by the outlook for the Chinese-driven commodity boom. BHP Billiton gained 1.6% and Rio Tinto advanced 1.4%. Shanghai Composite Index bucked the upward trend and lost0.4% to finish at 1689.39.


[R]6:30AM European stocks traded higher Wednesday, tracking U.S. markets[/R]
European markets were higher by mid-morning on Wednesday. The U.K. FTSE 100 index rose 0.1% to 5,902, the German DAX Xetra 30 index advanced 0.2% to 5,888 and the French CAC-40 index increased 0.2% to 5,134. BAE Systems gained 1% after it said that its first-half net income rose 28%. On the other hand, Safran, the aero engine and telecoms group, plunged 7.6% after first half proforma operating profits fell 35%.

Scania, the Swedish truck company, jumped 8.9% in the wake of confirming MAN AG, its German rival was likely to make a bid. The stock rose 9% on Tuesday. MAN added 2.8%. Investor rose 4.4% following the investment vehicle statement it was willing to sell its Scania stake. Mediaset, private broadcaster, fell 3.5% after it announced its Italian advertising sales target of 2-3% did not seem achievable.

Crude oil for October delivery fell 26 cents to $63.50 in electronic trading on the NYME in London. Gold for immediate delivery dropped $5.88, or 1%, to $581.57 an ounce in London. The euro was down slightly against the U.S. dollar Wednesday. In morning European trading the euro bought $1.2695, down from $1.2702 in New York on Tuesday. The British pound climbed slightly to $1.8748 from $1.8743 the day before, while the dollar rose to purchase 117.75 Japanese yen from 117.68 in New York.