schaeffer's market recap

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 Mobile.de, 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,
795.5


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


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