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Morning Dow Report: Market Drifts, Disney and Coca-Cola Rise, But Merck Falls

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

This morning, the Dow Jones Industrials (DJINDICES: ^DJI  ) took a break from its recent explosive moves higher, rising just one point just before 11 a.m. EST. In the absence of huge news on the macroeconomic and geopolitical fronts, traders seemed content to consolidate their extensive 2013 gains and prepare for what the new year will bring on Thursday. Disney (NYSE: DIS  ) soared higher, while Coca-Cola (NYSE: KO  ) also posted gains even as Merck (NYSE: MRK  ) lost ground.

Disney climbed 2.7% as the media giant got good news from analysts at Guggenheim, who upgraded the stock and raised their target price by $10 to $87 per share. In addition to the upgrade, Disney's Frozen animated kids' film found second life over the post-Christmas weekend, as ticket sales jumped by nearly half even though the movie has been in theaters for more than a month. The bullish story on Disney remains largely the same as ever, as smart content-acquisition deals appear poised to pay dividends for years or even decades into the future.

Coca-Cola picked up almost 1% after a favorable article in Barron's over the weekend pointed to the soft-drink giant as a potential rebound candidate for 2014. Citing factors like the coming Brazilian World Cup, restructuring of its bottling operations, and overly fearful sentiment among investors, the article concluded that Coca-Cola stock looks cheap. Yet concerns about the company's future growth are real, and even though share prices might imply a lack of growth, potential headwinds from increased regulatory scrutiny could indeed hurt Coca-Cola's earnings substantially in future years.

Merck fell 0.6% as investors reacted to a Wall Street Journal report detailing the pharma giant's plans to make major modifications to its research and development infrastructure. With plans to create R&D centers in large cities such as Boston, San Francisco, London, and Shanghai, Merck's future could look a lot like Johnson & Johnson's (NYSE: JNJ  ) , which has followed a similar innovation-building strategy since earlier this year. The key to recovering from patent-cliff setbacks is research and development, and Merck and its peers are right to do what it takes to foster future blockbusters in whatever way they can. Yet investors might not be happy at the extent to which Merck appears to be copying J&J's moves rather than coming up with its own approach to innovation.

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Related Tickers

5/26/2016 4:32 PM
^DJI $17828.29 Down -23.22 -0.13%
DIS $99.81 Down -0.05 -0.05%
Walt Disney CAPS Rating: *****
JNJ $112.90 Down -0.45 -0.40%
Johnson & Johnson CAPS Rating: *****
KO $44.69 Up +0.31 +0.70%
Coca-Cola CAPS Rating: ****
MRK $56.39 Down -0.18 -0.32%
Merck & Co., Inc. CAPS Rating: ****