S&P 500 Hits New Record Highs as the Dow Gains

We're back to breaching record highs on the markets this week as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) continues its march upward. As of 2:30 p.m. EST, the Dow has gained 93 points -- down from triple-digits earlier in trading -- and sits only about 200 points off the all-time high set last year. Nearly every blue-chip stock on the Dow is gaining ground today, with Big Pharma's Merck (NYSE: MRK  ) among the best by pulling down a 1% jump. Meanwhile, the S&P 500 (SNPINDEX: ^GSPC  ) hit a new intraday high today by gaining around 0.5%. Let's catch up on what you need to know.

Shakiness in the U.S. economy?

The economy kicked things off with disappointing but expected news today. U.S. GDP grew at an annual rate of just 2.4% in the fourth quarter, below the 3.2% economists initially had predicted. Consumer spending gained less than projected, picking up just 2.6% for the quarter. With the winter's harsh weather negatively impacting the first quarter, economists are questioning if the American economy's progress will slow in the early going of 2014.

Still, the gains posted aren't anywhere near worrying territory yet: Exports gained more than 9% during the fourth quarter, and much of the losses for the economy came from a 5% reduction in government spending. For American businesses, the U.S. economy still looks in great shape heading forward – even if it's not advancing as fast as everyone hopes.

The report hasn't hurt the Dow at all today, and Merck's stock hasn't shown the faintest signs of weakness during the day's run. Merck hasn't reported much in the way of news, but investors have rallied behind the company's increasing momentum as of late. The stock has picked up more than 14% year to date, overcoming the Street's shakiness early in January. While Merck's performance hasn't turned heads yet -- the company's most recent earnings report fell below analyst bottom-line expectations as the company's ballyhooed diabetes drugs Januvia and Janumet struggle to find more than modest growth -- Wall Street has pushed hard behind the company's up-and-coming drugs that could promise billions of dollars in future annual revenue.

Nothing else in Merck's pipeline approaches the promise of MK-3475, a cancer therapy under consideration by the FDA for the treatment of melanoma. Analysts have upgraded annual sales projections of the drug in 2014, with many now expecting between $3 billion and $4 billion in annual revenue from MK-3475 down the road, assuming it can pick up approval for more indications in the near future. However, Merck's all-oral hepatitis C therapy, while not among the first drugs hitting the market, also has impressed. Merck's current hepatitis C med, Victrelis, has lost steam lately. While the company has a long way to go to catch up to the leaders in this potentially $20 billion market -- Gilead Sciences' (NASDAQ: GILD  ) Sovaldi gained approval last December and may one day hit $7 billion or more in peak annual sales -- Merck's still pushing its own all-oral hep C therapy hard.

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