Merck (NYSE:MRK) led the Dow Jones Industrial Average (DJINDICES:^DJI) up today as the pharmaceutical sector jumped. The stock market started the day up after positive earnings from economic bellwether Alcoa (NYSE:AA), but then jumped late in the day after the release of the Federal Reserve Open Market Committee minutes from the meetings on March 18 and 19, as well as the minutes from a secret meeting held in early March. The Dow finished the day up 181 points, to 16,437. The S&P 500 (SNPINDEX:^GSPC) was up 20 points, to 1,872.

Twenty-six of 30 Dow stocks were positive for the day. The Dow started the day up slightly because last night, former Dow stock Alcoa(NYSE:AA) reported earnings. Alcoa produces aluminum, which is used throughout the economy. As such, Alcoa's results are traditionally seen as a bellwether for the rest of the economy. This relationship has become weaker during the past few years as the aluminum market has suffered from a supply glut. The surplus is worldwide, but is particularly acute in China, where the economy produces a surplus 2 million tons of aluminum per year. So, what did Alcoa's earnings say for the economy?

Alcoa reported that revenue fell 6%, to $5.45 billion, which is remarkable only because aluminum prices fell 8% year over year. The company reported a net loss of $0.16 per share, largely the result of restructuring costs. Alcoa closed 10% of its production capacity at facilities in Brazil, Australia, and New York. Excluding restructuring charges, the company would have reported income of $0.09 per share.

Alcoa is investing more than $300 million in new plants to provide more specialty aluminum, particularly for the automobile sector as companies begin to build more car frames out of aluminum. Alcoa is facing the same problem that many other U.S. companies are facing -- namely, low-cost production around the world in the most commoditized parts of its business. The reason the stock was higher today, and the market with it, is that Alcoa forecast that the worldwide economy will continue to improve, and that global aluminum demand will outstrip supply for the first time in years.

The second big piece of news affecting the stock market was the release of the Federal Reserve Open Market Committee minutes from the meetings on March 18 and 19. The release also included minutes from a secret video conference call held in early March, where the governors discussed ending the 6.5% target language for the FOMC statement. The Fed has been trying to stimulate the economy through its zero interest rate policy, as well as its long-term asset purchases. The key takeaway from the minutes was that the Fed believes there are numerous reasons to keep rates low longer than traditional monetary theory would suggest. Reasons highlighted included higher consumer savings around the world, an aging population, and current lending restraints. The market immediately jumped after the release as banks, stocks, and the economy benefit in the short run from low rates.


Today's Dow Leader
Merck led the Dow today as the whole pharmaceutical sector rose. Some commentators erroneously attributed this to Merck announcing it was starting a phase 3 trial on cancer drug Tecemotide. The drug is actually owned by Merck KGaA, a company based in Darmstadt, Germany. Merck KGaA was founded in 1668, and is the world's oldest pharmaceutical company. It started a U.S. subsidiary in 1887. In 1917, at the start of WWI, Merck KGaA's U.S. subsidiary was "expropriated," becoming the U.S. company Merck. The companies have been separate ever since. Merck KGaA holds the worldwide trademark, excluding the U.S. and Canada, to the Merck name. In the U.S., the company is referred to as EMD, which stands for "Emmanuel Merck Darmstadt."

The U.S. Merck -- the company that's traded on the Dow -- rose 3.76%, to $57.11. Merck was up on a general rise in the sector. One of the reasons for Merck's large gain compared to rivals is that the company has a low cash dividend payout ratio of 52%, meaning there's room for Merck to raise its already sizable dividend of $0.44 per quarter for a forward yield of 3.1%. Fool contributor Todd Campbell recently highlighted three under-loved dividend darlings, one of which was Merck. You can read more here.