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Cisco, Big Pharma Lead the Dow's Pop

By Dan Carroll - Mar 25, 2014 at 2:30PM

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Markets have a big day as consumer confidence data surprises.

After losing steam in the late morning, the markets have roared back in afternoon trading on the back of well-received economic data. The Dow Jones Industrial Average ( ^DJI 0.00% ) had gained nearly 100 points as of 2:30 p.m. EDT. Tech giant Cisco ( CSCO -1.82% ) ranks among the Dow's best stocks today in gaining more than 3.3%, while Big Pharmas Merck ( MRK 1.29% ) and Pfizer ( PFE -0.62% ) have bounced back from yesterday's losses behind welcome news. Let's catch up on what you need to know.

Consumer confidence jumps and Cisco seeks answers
The Conference Board's measure of consumer confidence jumped by a full 4 percentage points to 82.3 in March. That's far better than economists had projected and speaks well of consumers bouncing back from the harsh winter. It's a particularly good sign especially for retailers, which have endured a painful sting from the recession's aftermath and haven't found any traction with the winter weather that kept shoppers away in recent months.

Source: Wikimedia Commons

Few blue-chip stocks are moving like tech's Cisco today. Investors have rallied behind the company's $1 billion plan to launch its own cloud computing services, seeking to carve out a piece of a competitive but up-and-coming niche. The opportunity is huge for Cisco. Cloud computing leader Amazon.com ( AMZN -0.00% ) has reaped billions of dollars in annual revenue from its cloud services, according to analyst estimates. If Cisco can replicate even a fraction of that success, it'll breathe fire into what's become a downward trend in this network specialist's financial performance. Cisco's leadership expects further falling revenue in the current quarter, and taking advantage of the cloud's power to bring in sales would help the company right the ship in the long term.

Meanwhile, Merck's stock has gained 2.5% to rank among the top Dow members of the day. The company's aim to sell off its consumer health business has received a warm welcome on Wall Street, and Merck won another boost today on reports that French pharma rival Sanofi is looking to enter the race for the purchase of the business. Analysts believe that Merck's unit could earn up to $12 billion for the division, and that's great news for this company's investors. While Merck's stock has done well lately, flagging sales and so-so pipeline have left investors twisting. Refocusing on its core businesses and earning a big reward from this sale is the best outcome for Merck and its investors.

Rival Pfizer is making waves today as well, with the stock up 1.2% so far. Pfizer's lung cancer drug Xalkori, which was first approved by regulators back in 2011, hit another big mark today after the company announced that the therapy beat chemotherapy in holding off progression of lung cancer for a trial of previously untreated patients. That's a huge win for this up-and-coming drug's outlook. Xalkori already makes more than $300 million in annual sales, but analysts believe that it could become a blockbuster with possibly more than $1 billion in annual revenue in the near future. Today's stellar results should help Xalkori add to Pfizer's strong portfolio moving ahead.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Dow Jones Industrial Average (Price Return) Stock Quote
Dow Jones Industrial Average (Price Return)
^DJI
$35,719.43 (0.00%) $0.00
Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$73.21 (1.29%) $0.93
Pfizer Inc. Stock Quote
Pfizer Inc.
PFE
$51.40 (-0.62%) $0.32
Cisco Systems, Inc. Stock Quote
Cisco Systems, Inc.
CSCO
$57.02 (-1.82%) $-1.06
Amazon.com, Inc. Stock Quote
Amazon.com, Inc.
AMZN
$3,523.16 (-0.00%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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