Why Merck's Dragging on the Dow This Morning

As global as the economy has become in recent years, markets around the world don't always trade in lockstep. A surge of nearly 4% in Japan's stock market would typically bode well for stocks elsewhere, but political concerns about troubled areas of Europe and fears that competitive currency-devaluation will lead to tension among the world's leading economies helped to dampen enthusiasm. The Dow Jones Industrials (DJINDICES: ^DJI  ) have fallen about 27 points as of 10:50 a.m. EST, with other major U.S. benchmarks experiencing similar percentage losses.

Merck (NYSE: MRK  ) is among the biggest losers on the Dow, falling 1% after the company lost an important lawsuit over its osteoporosis drug Fosamax. A jury in a federal court case ruled in favor of a plaintiff who alleged that Merck's failure to warn doctors about the drug's risks led to delays in healing and further injury. The $285,000 award is insignificant in itself, but with 4,000 similar lawsuits pending, the news could be a bad omen of things to come for the pharma giant.

Elsewhere, Infinera (NASDAQ: INFN  ) plunged nearly 7% despite posting a modestly smaller-than-expected loss and matching revenue expectations in its fourth-quarter earnings release last night. Given the stock's huge run lately -- shares had been up more than 70% since mid-November before today's drop -- it's likely that investors simply wanted more than the digital optical-networking company provided in terms of both past results and future guidance.

Finally, Goodrich Petroleum (NYSE: GDP  ) surged 20% after reporting that a well in the Tuscaloosa Marine area of Mississippi has seen improved production rates. Even though Goodrich shares working interests on the well with Encana (NYSE: ECA  ) and Contango Oil & Gas, the results are still extremely promising, given Goodrich's substantial holdings in the area. Goodrich now expects to spend more on capital expenditures to develop those holdings in hope of maximizing potential revenue.

Is Merck facing more legal battles ahead?
Merck has had to deal with big litigation before: Its Vioxx drug cost the company billions in settlements. Will Fosamax cause similar problems for the company? Find out about Merck's hot prospects and biggest risks by reading our premium research report on the company, which details whether Merck is a buy at current levels. Our senior biotech analyst, Brian Orelli, Ph.D., walks you through both the opportunities and the threats facing Merck. The report also comes with a full 12 months of updates, so claim your copy now by clicking here.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2239185, ~/Articles/ArticleHandler.aspx, 8/21/2014 4:30:43 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement