Merck Moves the Dow and Facebook Pops as Earnings Season Gets Started

Alcoa shows strength in the industrial metals sector, but most stocks are only producing modest moves today.

Apr 9, 2014 at 12:13PM
Longview

Editor's Note: A previous version of this article incorrectly referenced news from Merck KGaA. This section has been removed and replaced with pertinent information on Merck & Co. The Fool regrets the error.

The second quarter has begun with a yawn, as both the Dow Jones Industrial Average (DJINDICES:^DJI) and the S&P 500 (SNPINDEX: ^GSPC) are wavering between breakeven and a narrow gain in early afternoon trading. Both indices were up by roughly 0.3% shortly before lunchtime, trailing the Nasdaq Composite's (NASDAQINDEX: ^IXIC) 0.7% pop as the tech-heavy index's many momentum stocks continue to zig-zag wildly. Over the past month, the two larger-cap indices have been effectively flat, while the Nasdaq has diverged to the downside with a few jerky pops and drops along the way:

^DJI Chart

^DJI data by YCharts.

The first bellwether stock to report second-quarter earnings was Alcoa (NYSE:AA), the Dow's metals representative until its removal late last year. Alcoa beat analyst expectations with a $0.09 earnings-per-share print for the second quarter (Wall Street was looking for just $0.05 in EPS). The aluminum producer now expects 7% overall global growth in aluminum demand this year, which is a respectable increase in a world that continues to waver between outright growth and merely muddling through.

Surprisingly, this result, and the 3.3% pop it produced in Alcoa's shares, has not translated to major gains across the board for the Dow's industrial representatives. Boeing (NYSE: BA), which is a major user of aluminum and aluminum-based composites in its aircraft production, was up 1.5% on little news beyond Alcoa's strong showing, but no other heavy-industry Dow component has produced any real gains to speak of. The Dow's best stock has nothing to do with heavy industry at all -- pharmaceutical giant Merck (NYSE:MRK), at a 2.5% gain, is the only Dow component to move in excess of 2% just after noon. No significant news has been released by the company today, but excitement has been building around its anti-PD-1 immunotherapy drug. Merck presented early results from the clinical trials for the experimental melanoma and non-small-cell lung cancer drug at the AACR meeting recently. This could be a major driver for the company if it eventually reaches the market.

Fblikethumb

Source: Wikimedia Commons.

The S&P 500 is having a tough time trading higher because many of its components are vacillating between narrow gains and narrow losses -- only about 270 of the index's 500 stocks were in positive territory heading into the afternoon. Leading the pack is a familiar face that is also helping propel the Nasdaq today: Facebook (NASDAQ:FB) was already trading nearly 5% higher at noon thanks to two notes on the social network's shares. Susquehanna analyst Brian Nowak now has a $69 price target (down from $72) on Facebook's shares, while SunTrust analyst Robert Peck is holding steady with a $70 price target. The median analyst price target is actually higher than that, as $74 per share remains the middle ground out of a huge pool of 40 analysts polled by Thomson Reuters.

Facebook's big pop more than offsets another disappointing performance from robotic-surgery pioneer Intuitive Surgical (NASDAQ:ISRG), which has lost 6.6% today after posting first-quarter results that showed a 24% drop in year-over-year revenue. The company managed to sell barely half the surgical robots it sold in the year-ago quarter (87 against 164). It now expects to sell fewer robots in 2014 than the 546 systems it sold last year, despite recently gaining regulatory clearance for the sale of an updated system that costs about the same as properly kitted-out earlier models. Facebook's pop, on the back of a much larger market cap, produced over eight times the movement in the S&P as Intuitive's drop today.

3 stocks poised to be multibaggers
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Our analysts have found multi-bagger stocks time and again. And now they think they've done it again with three stock picks that they believe could generate the same type of phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.

Alex Planes has no position in any stocks mentioned. The Motley Fool recommends Facebook and Intuitive Surgical. The Motley Fool owns shares of Facebook and Intuitive Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers