Stocks Rise; King Drugs Deal, Earns Help

Mon Jul 26, 2004
By Rachel Cohen

NEW YORK (Reuters) - U.S. stocks were higher on Monday as investors took some relief in solid earnings and healthy merger activity with drugmaker Mylan Laboratories Inc. (MYL.N: Quote, Profile, Research) planning to buy troubled competitor King Pharmaceuticals Inc. (KG.N: Quote, Profile, Research) for about $4 billion.

Drugmaker Pfizer Inc. (PFE.N: Quote, Profile, Research) weighed on Dow and the S&P 500 after Merck & Co. Inc. (MRK.N: Quote, Profile, Research) and Schering-Plough Corp. (SGP.N: Quote, Profile, Research) won U.S. approval on Friday to sell a 2-in-1 cholesterol pill called Vytorin. Moderate doses of the new drug are as potent as the highest doses of Pfizer's $10-billion-a-year Lipitor.

Quarterly scorecards from local telephone company BellSouth Corp. (BLS.N: Quote, Profile, Research) and medical technology company Boston Scientific (BSX.N: Quote, Profile, Research) , showing an increase in profits, kicked off another heavy week of the earnings reporting season.

"There was a bit of earnings news out this morning which was reasonably favorable," said John Caldwell, chief investment strategist at McDonald Financial Group. "This looks like a bit of reversal from last week, when there were a couple of brutal days when all news was bad news."

The Dow Jones industrial average was up 19.19 points, or 0.19 percent, at 9,981.53. The broader Standard & Poor's 500 Index was up 1.32 points, or 0.12 percent, at 1,087.52. The technology-laced Nasdaq Composite Index was up 3.59 points, or 0.19 percent, at 1,852.68.

Microsoft Corp. (MSFT.O: Quote, Profile, Research) , the world's largest software company, was the biggest boost to the broad Standard & Poor's 500 index and the technology-laden Nasdaq after Barron's reported the stock is attractively valued as the company prepares for further revenue gains and faster growing profits.

On the economic front, the National Association of Realtors said existing home sales unexpectedly rose in June to a 6.95 million unit annual rate. Economists in a Reuters survey had forecast a median 6.6 million annualized units total, down from 6.8 million annualized units in May.

Shares of Microsoft, the world's largest software company, rose 64 cents, or 2.3 percent, to $28.66.

King Pharmaceuticals jumped after Mylan Laboratories, the biggest U.S. maker of generic drugs, said on Monday it agreed to acquire King, adding patent-protected brand drugs to Mylan's generic-drug offerings.

King was up $3.12, or 30 percent, to $13.50 on the New York Stock Exchange. Mylan fell $2.52, or 13.6 percent, to $15.99.

BellSouth said second-quarter earnings rose on stronger sales of long-distance and high-speed Internet services. Its shares rose 59 cents, or 2.3 percent, to $26.49.

Boston Scientific said quarterly net income nearly tripled, even with a $57 million after-tax charge related to the recall of its Taxus drug-coated stent, a lucrative device used to clear clogged heart arteries.

It rose $1.55, or 4.6 percent, to $35.14 on the NYSE.

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