Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The Dow Jones Industrial Average (^DJI +1.79%) wasn't able to build on last week's gains this morning. The benchmark was down a modest 24 points as of 11:05 a.m. EDT. A fourth consecutive drop in pending home sales offset optimism about rising production activity in the U.S., but poor earnings news from Merck (MRK +3.13%) and losses from Microsoft (MSFT +0.60%) and Boeing (BA +1.95%) contributed to the Dow's weakness.
Microsoft fell more than 1% after an AllThingsD report revealed that Skype corporate vice president Mark Gillett would leave the company. Microsoft bought Skype two years ago, yet amid all the challenges that Microsoft has faced in boosting its presence in the smartphone and mobile-device space while still making the most of its core software businesses, Skype hasn't been a key focus for the company. Gillett's departure could reflect the lack of priority that Microsoft has given Skype, and it reveals the ongoing struggle that Microsoft will have in restructuring its operations to create a more coherent firmwide strategy.
Merck, meanwhile, is the Dow's worst performer today, falling 2.5% following its disappointing third-quarter earnings report. Falling revenue and earnings were expected, but one big disappointment came from the poor performance of its Januvia diabetes drug, which has taken over the role of top seller since the loss of patent protection on asthma treatment Singulair. Dealing with patent cliff issues has been tricky for Merck, and it needs to combat falling sales with more research and development to bolster its pipeline if it wants to start growing again.
Boeing's drop of more than 1% likely came from an analyst downgrade, but the company's long-term prospects are still sound. Opportunities like a potential $30 billion order from airline Emirates, as well as a collaboration with Lockheed Martin (LMT 2.52%) to gain a share of a lucrative potential $55 billion stealth-bomber contract from the U.S. Air Force, justifies Boeing's ascent to new record highs. And regardless of near-term share-price moves, the future looks bright for long-term investors so long as Boeing can execute on all the business it has reaped.
