For the third day in a row, the Dow Jones Industrial Average (DJINDICES:^DJI) hardly moved, as investors struggled to interpret mixed earnings reports and a modestly improved GDP report. The blue chips finished the day up three points, or 0.03%.
Third-quarter GDP came in at 2% growth, up from 1.3% in the second quarter, and just beating economist predictions of 1.9%. The figure confirms that the economy is growing, but not fast enough to significantly bring down unemployment. Consumer spending and the housing sector led the charge upward, with residential jumping 14.4% in the quarter. Business investment, on the other hand, fell by 1.3%, its first drop since the recession, and exports declined slightly for the first time since 2009.
Merck (NYSE:MRK) was the only Dow component to report earnings today, falling 0.3% on the news. The pharmaceutical giant said net income increased 2%, despite a 4% sales decline, to $11.5 billion, attributable to asthma drug Singulair coming off patent. Singulair had contributed $5.5 billion in revenue last year, but prescriptions were down 90% once the patent expired on August 3. Sales growth in emerging markets like China and India, which grew by 15%, helped make up for the loss of Singulair sales. Adjusted EPS of $0.95 topped estimates of $0.92, though sales were slightly below expectations.
Elsewhere on the Dow, the financials led the losers. as Bank of America (NYSE:BAC) and JPMorgan Chase fell 1.3% and 1.2%, respectively. Bank of America appears to be in legal trouble for the second time this week, as it was subpoenaed along with eight other international banks as a result of the LIBOR scandal. In all, 16 banks have been subpoenaed in the matter, which could lead to civil charges on antitrust and fraud claims. News that some European banks are planning to restrict, or even stop trading, certain derivatives with U.S. banks in response to Dodd-Frank also weighed on the sector.
On the other end of the spectrum, Microsoft (NASDAQ:MSFT) and Intel (NASDAQ:INTC) were the biggest gainers, both climbing 1.2%, apparently on excitement about Microsoft's new Surface tablet. This quarter has been a tough one on tech companies, especially chipmakers, so the new product seems cause for some enthusiasm. The Surface drew crowds at Microsoft stores around the country, but not to the level seen with new Apple products. The release of Windows 8 also likely pushed up both stocks, though the Surface seemed to be the bigger attraction of the two.
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