Dow Soars After Putin Comments, But Why Are Merck and Pfizer Still Falling?

The possibility of a peaceful resolution in Ukraine trumped earlier nervousness, but the Dow's pharma stocks couldn't recover.

May 7, 2014 at 12:30PM
Longview

Wednesday has been a turbulent day for the Dow Jones Industrials (DJINDICES:^DJI), which traded up more than 108 points as of 12:30 p.m. EDT. After stocks gave up early gains when Federal Reserve Chairwoman Janet Yellen suggested that investors needed to rein in their dependence on low interest rates, news about an hour ago that Russian President Vladimir Putin had withdrawn troops from the Ukraine border eased tensions in the area and gave investors some hope that the Ukrainian presidential election on May 25 could create a framework for a lasting resolution to the territorial conflict. Still, even with the positive reaction, Merck (NYSE:MRK) remained the worst-performing component of the Dow Jones Industrials, falling 1.5% and adding to its losses from recent sessions. Pfizer (NYSE:PFE)joined its Dow pharma peer on the downside with a 1.2% loss.

Mrk Vaccine

Source: Merck.

Merck's decline Wednesday came follows the drug company's deal yesterday to sell its consumer-care business to Bayer for $14.2 billion. The sale includes some of Merck's best-known brand names, including Claritin, Afrin, and Coppertone, giving Bayer access to the worldwide prominence that those brands have developed thanks to Merck's efforts. In the press release yesterday, Merck CEO Ken Frazier established the company's "goal of being the premier research-intensive bio-pharmaceutical company through targeted investments that strengthen our product portfolio and enhance our pipeline," raising some concerns about whether Merck would undertake what could be an expensive shopping spree. Frazier later said investors shouldn't expect a big acquisition along the lines of what Pfizer is trying to accomplish, but shareholders want to see decisive action that nevertheless maintains the value of Merck's ongoing business.

Pfe

Pfizer's ongoing attempts to acquire U.K. peer AstraZeneca got even more complicated as British Prime Minister David Cameron said he wants to see a greater commitment on the drugmaker's part to make sure it won't dramatically reduce employee counts and investment in the British Isles if a merger were to take place. Cameron's worries on that front should be tempered by the fact that the U.K.'s favorable tax laws that are a key component of the impetus for the merger between the British drug company and the Dow component in the first place. Pfizer has a vested interest in making sure that its presence there is sufficient to satisfy tax authorities on both sides of the Atlantic. Yet with so much uncertainty about the merger right now, shareholders have to feel like the price tag for a successful resolution could rise so high that they won't get any of the benefit of a larger Pfizer.

The Dow Jones Industrials could remain volatile as they get whipsawed by different factors. For the Dow's pharma components, questions remain on how best to pursue growth without overpaying in the process.

Invest in the next wave of health-care innovation
The Economist compares this disruptive invention to the steam engine and the printing press. Business Insider says it's "the next trillion dollar industry." And the technology behind is poised to set off one of the most remarkable health care revolutions in decades. The Motley Fool's exclusive research presentation dives into this technology's true potential, and its ability to make life-changing medical solutions never thought possible. To learn how you can invest in this unbelievable new technology, click here now to see our free report.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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