Diagnosing Today's Dow Performance

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) has been having a difficult time this morning deciding whether or not it wants to be up or down. This may stem from the continued confusion on behalf of investors as they try to decipher new economic data as a means to predict the Fed's stance on its current stimulus policy. Though the index dropped and rebounded a few times so far in trading, it's currently sitting at a 33-point gain just before 11:45 a.m. EDT.

Economic news
This morning investors were given mixed economic data regarding income and spending and consumer confidence. Both personal income and consumer spending were down 0.1% in April, which disappointed analysts and investors alike. Expectations were set for a 0.1% increase for income and flat spending for the month. Coupled with this morning's consumer confidence data, which is now back to pre-recession highs, the mixed data signals a disconnect in the economic recovery. Though confidence in the recovery may be high, the improvements have not yet reached the average household's billfold.

This mix of data provides just one more piece to the puzzle as investors try to find signs that the Fed will begin paring back its current stimulus plan. This week alone, investors have gotten news that unemployment figures are up, housing prices are rising, pending home sales are up, and now personal income and spending are down. This seemingly conflicting data leaves investors with little confidence as to how they should proceed in the markets.

Inside the Dow
Health-related component stocks are putting a drag on the Dow's forward momentum, with Merck (NYSE: MRK  ) being the only exception. Up 0.93% this morning, the drugmaker is enjoying the boost from its recently announced third-quarter dividend. Matching its previous payouts, the company will distribute $0.43 per share on July 8.

Procter & Gamble (NYSE: PG  ) is down 1.55% in trading, despite a resounding endorsement from activist investor Bill Ackman, who recently stated that P&G is one of the best companies in the world. Ackman's comments may have seemed like a backhanded compliment to some investors. He noted that the company is under-earning compared to its abilities, with a prediction that earnings per share will rise from $4 to $6 -- an encouraging upside. The return of A.G. Lafley to the role of CEO was initially well recieved, but investors may now be rethinking the return of a former CEO, bringing questions to light about his previous tenure and what it means for him to return.

Pfizer (NYSE: PFE  ) is down 0.91% this morning. The drug manufacturer is making more moves to clean up its operations with a sale of its Bristol, Tenn., manufacturing plant to Baltimore-based UPM Pharmaceuticals. Earlier this week, Pfizer issued $4 billion in new bonds to pay off other debts, a move not taken by the company since 2009.

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 special 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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