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Consumers Give Investors Confidence to Bid Stocks Higher

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The markets moved higher today after two reports released this morning showed that consumers are still spending, confident that the economy is on the right track. First, the Department of Commerce released a report on consumer spending, which showed purchases rose 0.2% in March. And although that was a big decline from the 0.7% increase we experienced in February, it was better than the 0.1% rise most economists expected.  

The other report came from the National Association of Realtors. The pending home sales index rose by 1.5% in March, but supply is beginning to run dry despite strong demand. This is a great sign that many Americans feel confident to purchase a home and an indication that prices will surely continue to rise and even faster than expected.  

These reports helped the Dow Jones Industrial Average (DJINDICES: ^DJI  ) rise by 106 points, or 0.72%, while the S&P 500 also rose 0.72% and the Nasdaq increased by 0.85%. The Dow now sits at 14,818, while the S&P 500 rose to 1,593 and the Nasdaq climbed to 3,307. And even though the markets moved to new heights, we can still find a few losers.

A few Dow losers
Shares of the big-box retailer Wal-Mart (NYSE: WMT  ) fell 0.82% today on very little news. Year to date, shares are up 14.89% while the Dow is up 13.08% after today's strong move. Last week Wal-Mart rose 0.95% as U.S. lawmakers voted on the national online sales tax bill, which will likely help big-box stores by bringing their prices more closely in line with Internet-based companies'. But regardless of the sales tax, some feel will continue to dominate and perhaps one day even put Wal-Mart out of business. To find out more, click here.

While the housing report is great news for current homeowners, it is bad news for those thinking about buying a home in the near term, and this could be a bad sign for the big banks like Bank of America (NYSE: BAC  ) , which have been focusing more of their attention on the mortgage business. Since there are fewer homes for sale, fewer new mortgages can be generated, thus causing lower profits for the banking industry. Shares of Bank of America fell 0.32% today.

Shares of Merck (NYSE: MRK  ) closed lower by 0.1% today after the company announced it would be working with longtime rival and fellow Dow component Pfizer (NYSE: PFE  ) on a new treatment for Type 2 diabetes. The collaboration will be an attempt to combine Merck's Januvia drug with Pfizer's older diabetes drug Metformin and Pfizer's experimental pill Ertugliflozin. Thus far, Merck has paid Pfizer $60 million and could make additional payments as the drug proceeds toward clinical trials, FDA review, and sale. Merck and Pfizer will split the revenue and development cost of the drug on a 60-40 basis, with Merck taking the larger share. 

Can Merck beat the patent cliff?
This titan of the pharmaceutical industry stumbled into 2013 and continues to battle patent expirations and pipeline problems. Is Merck still a solid dividend play, or should investors be looking elsewhere? In a new premium research report on Merck, the Fool tackles all of the company's moving parts, its major market opportunities, and reasons to both buy and sell. To find out more click here to claim your copy today.

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Related Tickers

9/29/2016 9:33 AM
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Pfizer CAPS Rating: ****
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