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schaeffer's market recap

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    Market Recap

    The pharmaceutical sector seemed to dominate the news this afternoon.
    Merck moved higher today after Barron's indicated that security
    represented a potential buying opportunity in the wake of its decision to
    cancel several drug programs last year. The company also appears to be
    receiving a lift from the latest attempts at consolidation in the
    pharmaceutical sector, as analysts cite the firm as an ideal merger or
    takeover candidate. Other news within the pharmaceutical sector comes from
    Aventis. The company rejected the hostile, $60-billion takeover offer
    propositioned by rival drug company Sanofi-Synthelabo. Meanwhile, Schering-
    Plough disappointed the Street when its posted a fourth-quarter loss of
    $181 million, or 12 cents per share, compared to its profit of 13 cents
    per share for the same period a year ago. The company cited special
    charges related to a voluntary retirement and a sharp slowdown in sales.
    In fact, sales fell 18 percent in 2003. Excluding charges, the
    pharmaceutical firm earned a penny per share, missing the consensus
    estimate of four cents per share.

    In earnings news, Lexmark International surged more than six percent after
    the firm reported fourth-quarter earnings of $138.8 million, or $1.05 per
    share, handily topping year-earlier earnings of 90 cents and above analyst
    estimates for 92 cents. The printer maker said that it continues to remain
    "cautious" about its outlook due to the uncertain economic environment and
    potential "aggressive" price competition. For the first quarter, the
    company expects earnings of 79-89 cents per share, surrounding analyst
    forecasts of 84 cents. Rival printer manufacturer Hewlett-Packard was also
    higher today, buoyed by LXK's strong fourth-quarter results. Elsewhere,
    KimberlyClark posted a fourth-quarter profit of 91 cents per share,
    besting the Street estimate by three cents per share. The company saw a 24-
    percent increase in profits as sales continue to improve. Furthermore, the
    firm is targeting $150 million in cost cuts in 2004.

    In technology, Oracle stepped up its hostile takeover bid for its biggest
    rival PeopleSoft. In a move designed to secure a majority on PSFT's board
    and dismantle the company's current anti-takeover strategy, ORCL proposed
    five directors and a stockholder measure to expand the board to nine
    members. ORCL's move late Friday follows several extensions of its hostile
    bid, currently valued at $7.3 billion. Rounding out this bout of hostile
    takeover news on a lighter note, eBay announced that it will pay $152
    million to buy, a provider of online classified listings in
    Germany. The acquisition is expected to close in the second quarter and
    will have a "nominal" effect on 2004 revenue.

    The Dow Jones soared 134 points (or 1.27 percent) higher this afternoon to
    close above the 10,700 level for the first time since June 2001. Alcoa was
    the only component to close the session lower. Meanwhile, American Express
    (AXP), IBM, Merck, and Procter & Gamble were among the heftiest gains.
    Furthermore, AXP posted fourth-quarter earnings of 60 cents per share,
    slipping past the Street estimate by a penny per share. Revenue for the
    quarter came in at $7.07 billion. The tech-laden Nasdaq Composite jumped
    almost 30 points (or 1.41 percent) in trading this afternoon.

    In economic news, U.S. existing home sales soared 6.9 percent higher in
    December to 6.47 million units. The Street has estimated levels of 6.0
    million units. Looking ahead, investors will be tuning into the FOMC
    meeting on Tuesday, while the rest of the week brings new single-family
    home sales, durable goods orders, and the advance Gross Domestic Product
    reading for the fourth quarter.

    Levels to watch for in Tuesday's trading :

    Dow Jones Industrial Average (INDU) - support at 10,300; resistance at 10,

    S&P 500 (SPX) - support at 1105, resistance at 1176.97

    Nasdaq Composite (COMP) - support at 2030; resistance at 2200
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