Strong Consumer Sentiment Pulls Markets Higher

This morning it was reported that the Thomson Reuters/University of Michigan preliminary index on consumer sentiment rose to 83.7 for May. That's the highest reading since July 2007 and up from 76.4 during April. While analysts were expecting an increase, the median forecast in a Bloomberg survey pinned the gain at 77.9.

This positive economic data has given investors the confidence to continue the bull rally, and as of 12:55 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is up by 55 points, or 0.35%, while the S&P 500 and the Nasdaq are up 0.43% each.

Although the report indicates that consumer sentiment is high, a number of retailers, including Wal-Mart (NYSE: WMT  ) , are still reporting that customers remain wary. Looking at the whole, Americans seem to have easily dealt with both the payroll tax increase and sequestration, but Wal-Mart is still claiming that its customers haven't, and the evidence suggests that Wal-Mart may be right. Same-store sales fell 1.4% this past quarter after Wal-Mart had beaten same-store sales numbers for the previous six straight quarters. Additionally, Wal-Mart had to lower its prices on groceries and daily necessities during the quarter. After falling 1.7% yesterday, shares of Wal-Mart are down another 1% today.

Shares of Walt Disney (NYSE: DIS  ) are down 0.8% today after they were downgraded from "overweight" to "neutral" by an analyst at Atlantic Equities this morning. The analyst did, however, increase the price target from $65 per share to $74. 

Shares of Merck (NYSE: MRK  ) and Pfizer are down 1.7% and 1.3%, respectively. Shares of Merck are likely lower because of the 13F recently filed by famed investor Stanley Druckenmiller. In the past, Druckenmiller was in charge of a portfolio for George Soros and ran Duquesne Capital, but now he simply manages his own money and has to file with the SEC. Going into the 2013, Merck had been one of Druckenmiller's top holdings, but he has totally liquidated the position.

While he still has large positions in Pfizer and Eli Lilly, anyone investing in the industry may be nervous about the move to dump Merck. At this time all the large pharmaceutical companies look to be on rather equal footing, so if Druckenmiller doesn't like one, why would he like any of them?  

Can Merck beat the patent cliff?
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