Morning Dow Report: Merck, Cisco Soar; Microsoft Facing Cracked Windows?

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.

Earnings season officially began last week, but the quarter really hits its stride this week as major banks give their view on the overall state of the economy. Meanwhile, investors appear to be in a wait-and-see mode once more, as the Dow Jones Industrials (DJINDICES: ^DJI  ) were down five points as of 11 a.m. EST despite seeing big upward moves from Merck (NYSE: MRK  ) and Cisco Systems (NASDAQ: CSCO  ) . Weighing against those gains were losses from Microsoft (NASDAQ: MSFT  ) , while the relatively low share prices that Merck and Cisco command limited their impact on the price-weighted index.

Merck soared 5.5% after reporting several pieces of encouraging news. A preliminary FDA review of clinical-trial data gave further evidence that the blood-clot medication vorapaxar would likely gain the backing of an advisory panel this week and then agency approval in the near future. But investors also applauded Merck's further exploration of strategic options for its animal-health and consumer-care businesses, with the company saying it expects to complete the review process and take action this year. With many peers having taken similar action, Merck could unlock shareholder value as a result of anticipated moves.

Cisco climbed 2.3% after a positive article in Barron's over the weekend pointed to the potential for the networking giant to produce 20% returns despite facing competitive pressures. Yet interestingly, the article acknowledged the ongoing threat of technology such as software-defined networks, which could arguably render much of the hardware-based solutions that make up Cisco's bread-and-butter business obsolete in the long run. Given how much Cisco has been beaten down lately, a rebound isn't all that surprising, but investors have suffered disappointment before even after similarly hopeful bounces.

Microsoft fell 1% after dealing with speculation about the rumored future release of a Windows 9 reboot of its staple operating system software in early 2015. With so many alternatives to Windows becoming available, for mobile devices and for traditional computers, Microsoft could be losing its grip on what has been a decades-long cash cow. The challenges only make it that much more important for Microsoft to find a worthy successor to CEO Steve Ballmer and start making the tough strategic choices that will help the company best exploit its potential and its extensive financial resources.

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