Posted on: Friday, October 1, 2004
Merck's Vioxx recall drags down the Dow
By Michael J. Martinez
Associated Press
NEW YORK — Wall Street closed out a dismal third quarter with a mixed performance yesterday after Merck & Co. said it would remove its best-selling Vioxx arthritis drug from the market. Merck's unexpected news left blue chips with a loss for the day, while high-tech stocks got a lift from bargain hunters.
Bad economic news also weighed on stocks as the Labor Department reported the highest increase in weekly first-time jobless claims in seven months, and the Commerce Department reported consumer spending was flat for the month of August.
While Merck's troubles seemed to be limited to the company itself — pharmaceutical stocks were mixed to slightly lower on the news — it was just one of many pressures on stocks throughout the third quarter, which saw oil prices rise past $50 per barrel, an unexpected slowdown in economic growth and negative earnings warnings from top companies.
The major indexes ended the quarter substantially lower, with the Dow losing 3.4 percent, the Nasdaq tumbling 7.4 percent and the S&P 500 dropping 2.3 percent. The Dow's loss from July to September was the biggest quarterly decline since the first quarter of 2003; the Nasdaq's losses were the worst since the third quarter of 2002.
Advancing issues outnumbered decliners by more than 8 to 5 on the New York Stock Exchange, where volume came to 2.33 billion shares, compared with 1.8 billion on Wednesday.
Merck's troubles — Vioxx was found to carry an increased risk of heart attack and stroke — magnified on the market because the company is part of the Dow Jones industrials. Analysts said the Dow likely would have been flat to slightly higher without Merck's announcement.
