The stock market is aiming to end 2014 on a strong note, and today's move higher for the Dow Jones Industrials (DJINDICES:^DJI) added a new milestone to its already impressive list of accomplishments for the year. The Dow quickly moved above the 18,000 mark this morning and was up 85 points just before 12:30 p.m. EST as investors pointed to positive performance from the latest report on the state of the U.S. economy. The Commerce Department's final read on third-quarter gross domestic product showed the U.S. economy grew at a 5% clip, posting its fastest gain in more than a decade. Yet while many Dow stocks soared due to upbeat showings in retail sales and personal spending, pharma giants Pfizer (NYSE:PFE), Merck (NYSE:MRK), and Johnson & Johnson (NYSE:JNJ) all fell sharply Tuesday morning, with declines of 2% to 3% for the trio.
If the Dow holds onto the 18,000 level by the close, it will mark the latest in a long series of quick milestones for the venerable average. After having hit 15,000 in May 2013, the Dow took just over six months to hit 16,000 and eight months to reach 17,000 on July 3. The less than six month period for the latest milestone won't be the fastest in history -- the Dow took just 35 calendar days to go from 10,000 to 11,000 in 1999 -- but it will nevertheless show the impressive resiliency of the bull market.
Yet today's terrible performance in the pharmaceutical sector shows that rising markets don't pull up every stock in lockstep. Drug stocks appear to be reacting to increased pressure from prescription-benefits manager ExpressScripts (NASDAQ:ESRX) to keep drug prices in check, using its bargaining power in representing employers in the U.S. to pressure Merck, J&J, Pfizer, and other drugmakers to accept thinner profit margins under threat of taking their business elsewhere. Yesterday, ExpressScripts said that it would no longer cover an expensive hepatitis C treatment from Gilead Sciences (NASDAQ:GILD), instead favoring a newer product from AbbVie (NYSE:ABBV). With so many areas in which pharmacy benefits management companies could seek to squeeze drugmakers, investors in the pharmaceutical sector are rightfully concerned that their competitive advantages might not last as long as they did when the drug-distribution business was more fragmented.
As a result, it's important for you to assess each stock you own in its own context. If the fundamentals behind a particular business start to sour, it won't matter if the market is going up or down -- your stock will flounder.
Dow 18,000 will get a huge amount of attention from short-term-minded traders looking to end 2014 on a positive note. For long-term investors, though, the latest Dow milestone marks only another piece of trivia on the long road to investment riches. By keeping your eyes firmly focused on your long-term financial goals rather than getting caught up in the hype of the Dow passing another thousand-point level, you'll be more likely to stick with your successful investing strategies and take full advantage of the favorable economic conditions we've seen recently.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Express Scripts, Gilead Sciences, and Johnson & Johnson. The Motley Fool owns shares of Express Scripts, Gilead Sciences, and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.