Blue Chip stocks took it on the chin today after drug maker Merck plunged on news that one of its key products was being pulled from the shelves, but tech shares managed to duck and weave their way to a modest gain.
Merck shares plunged 25 percent after the company said it would pull its arthritis drug Vioxx, which brought in US$2.5 billion, or about 10 percent of its total sales last year, from the market worldwide. The news helped push the Dow Jones Industrial Average lower on the day.
At the close, the Dow was down 55.97 to 10,080.27. The Nasdaq, however, managed to post a small gain, climbing 2.90 points to 1,896.84. The S&P 500 was down a fraction of a point to 1,114.58.
IBM helped tech shares along with news that it had reached a settlement resolving a massive lawsuit by employees who said they had been shortchanged by Big Blue’s pension system. An additional boost came when a report from the Semiconductor Industry Association showed chip sales up 1.1 percent in August to $18.2 billion.
Two economic reports bore bad news, but extenuating circumstances suggested the conditions might be temporary.
The Commerce Department said consumer spending was flat in August compared to the month before, with rising gasoline prices blamed for taking the zip out of consumers’ spending habits. Holding the index in place was a sharp drop in durable items purchased, with spending on items such as automobiles off 1.6 percent.
Personal Income Up
The same report also contained some good news, showing that personal income was up 0.4 percent, the second increase in as many months.
The Labor Department, meanwhile, reported a spike in weekly claims for unemployment, with first-time filings rising 18,000 to 369,000 last week, the highest reading since February. But the surge was attributed at least in part to a series of hurricanes that ravaged Florida and other parts of the South.