This morning's movements in the Dow Jones Industrials (DJINDICES: ^DJI ) look eerily familiar to those who have been watching the day-to-day movements of the average in recent months. The stock market opened modestly lower this morning, with most blaming general concerns, rather than any specific news, for stocks' lackadaisical open. Yet within the first couple of hours, the Dow overcame its modest decline and turned positive, climbing 15 points as of 12:45 p.m. EDT. The broader market posted similar gains, with the S&P 500 also pushing further into record territory, rising to 1,670.
But some of the Dow's components are under pressure today. Cisco (NASDAQ: CSCO ) has led the Dow's decliners with a loss of about 1.7%, giving back some of the huge gains the tech giant posted last week. An analyst report this morning noted that despite NetApp's collaboration with Cisco on the FlexPod validated data-center platform, Cisco was unlikely to seek to acquire NetApp. By itself, that doesn't justify the drop in Cisco's share price, but it serves as a reminder that despite Cisco's strong earnings report last week, the industry on the whole is suffering from intense competitive pressure that isn't likely to subside anytime soon.
Merck (NYSE: MRK ) has also dropped, falling 1.4% after the FDA expressed concerns about the side effects of the company's suvorexant insomnia drug. Citing increased daytime drowsiness and suicidal thoughts, the FDA suggested that a smaller dose might prove equally effective while reducing side effects. A panel of outside experts is expected to rule on the drug's safety later this week, and with so much riding on Merck's ability to boost its pipeline, a negative finding could hurt the company's chances of replacing lost revenue from off-patent drugs as quickly as it had hoped.
Finally, consumer giants Coca-Cola (NYSE: KO ) and Procter & Gamble (NYSE: PG ) have both fallen more than 1%. Neither company reported significant news today, but value investors have grown increasingly concerned about the rise in both companies' share prices relative to their earnings. Despite their reputations as defensively oriented stocks that hold up well in market reversals, their above-market multiples seem out of line with the companies' growth prospects. With Coke facing the potential restraint of anti-obesity sentiment and P&G still dealing with activist investors looking over its shoulder, investors in both companies may simply see better opportunities elsewhere.