After a middling opening, the Dow Jones Industrial Average (^DJI 0.13%) fell in the afternoon on -- surprise, surprise -- murmurs that the Federal Reserve will begin scaling back its stimulus program sooner than some investors had hoped. On the day, the blue chips ended the day down 76 points, or 0.5%. Today it was the Kansas City Fed President Esther George's turn, as she spoke out against more stimulus, saying once again that continued bond-buying was only inflating markets. Another Fed official also said changes could be coming soon to the $85 billion monthly bond-buying program. Still, the Dow was able to rebound from a session low of 1% down.
Turning to individual stocks, Home Depot (HD 1.07%) led the Dow's fall, dropping 2.6%, though there was no particular news affecting the home-improvement retailer. Home Depot shares were probably brought down by concerns about the Fed cutbacks, as the stock has been on a tear over the last year, increasing by more than 50%, and nearly tripling in the past two years as the strengthening housing market has fueled its recovery. Still, with a P/E over 24 and a general sentiment that the market is peaking, investors may have simply taken the opportunity to grab some juicy profits.
Merck (MRK 1.49%), meanwhile, was a strong performer for the second day in a row, gaining 2% on the day. Today's gains simply seem to have carried over from yesterday's announcement that the drugmaker has made a potential breakthrough with a melanoma drug, as recent results showed that it helped reduce tumors in more than half of patients who took the maximum allowable dosage. My colleague Dan Caplinger also believes that the discovery could lead to several other new drugs, because of its ability to stimulate the PD-1 protein.
AT&T (T 2.60%) was another strong gainer today, rising 1.7%. Last night, the telecom announced a plan with IBM (IBM 1.69%) to develop more network-efficient apps. The company said that "the new technology enables enterprise to conduct comprehensive testing of their networks' battery usage on mobile devices." The partnership could also bear more fruit down the road, as AT&T stands to benefit from a variety of applications of IBM's technology.
