msnbc.com staff and news service reports
updated 2/22/2005 7:21:54 AM ET 2005-02-22T12:21:54

The Dow Jones industrial average closed Friday with modest gains after a Food and Drug Administration panel voted to allow sales of the popular painkiller Vioxx, despite acknowledging the risks it poses for heart problems.

Major Market Indices

A panel of U.S. experts voted by a narrow margin Friday afternoon to allow Merck, which makes Vioxx, to market the drug in the United States. The company voluntarily pulled it from the market last year because of evidence that it poses risks of heart trouble and strokes.

The Dow rose 30.96 points, or 0.3 percent, Friday and is once again up for the year to date. The broader Standard & Poor’s 500-stock index added 0.84 point, or 0.1 percent, but the tech-rich Nasdaq composite index lost 2.72 points, or 0.1 percent.

Shares of Merck rose 13.03 percent to close the session at $32.61, fueling a late-day rise that helped the Dow to close the day modestly higher. But the market’s main indices finished the week with a loss. The Dow lost 0.1 percent for the week, while the S&P 500 lost 0.3 percent and the Nasdaq fell 0.9 percent.

Also Friday, the FDA voted to keep Celebrex and Bextra — two other painkillers known as cox-2 inhibitors that pose a risk of heart trouble — on the market. Celebrex is made by Pfizer, a Dow component that saw is shares jump 6.9 percent to $26.80.

Earlier, in the day, stocks were flat and bond prices fell after new data showed a sharp rise in wholesale prices, intensifying fears about inflation.

The Labor Department report showed wholesale prices rising at the fastest rate in six years. While the Producer Price Index rose just 0.3 percent in January, a drop in oil and food prices kept that figure artificially low. With volatile oil and food removed, the “core” PPI figure rose 0.8 percent — a hefty one-month rise that could signal higher consumer prices down the road.

“Inflation-sensitive stocks are doing well, but that’s about it,” said Brian Pears, head equity trader at Victory Capital Management in Cleveland. “There’s not a lot of reason for people to make bets on too many other sectors,” he added.

Inflation concerns kept the markets from substantially surpassing their December 2004 highs this week, as Federal Reserve Chairman Alan Greenspan, while giving lawmakers a bullish assessment of the economy, warned that higher prices could become an issue.

On Friday, the U.S. dollar got a small lift from the inflation data, shoring up modestly against the euro, the Japanese yen and the British pound, while gold prices slipped. The yield on the 10-year Treasury bond rose to 4.27 percent as inflation fears caused a sell-off in long-term bonds.

“Stocks are definitely seeing a hit from the bond trade,” said Russ Koesterich, U.S. equity strategist for State Street Corp. in Boston. “With inflation worries picking up, it’ll be hard for this market to go higher as earnings growth decelerates and interest rates go up.”

A rise in oil prices also pressured stocks. A barrel of light crude was quoted at $48.35, up 81 cents on the New York Mercantile Exchange.

A fresh round of merger news also helped investors overcome the economic data. Qwest Communications International Inc. was up 11 cents at $3.95 after the company said it would renew and possibly raise its bid for MCI Inc., hoping to break a $6.7 billion deal between MCI and Verizon Communications Inc. MCI rose $1.65 to $22.31, while Verizon slipped 37 cents to $35.31.

After what appeared to be an impasse, Federated Department Stores Co. is again discussing a takeover bid for May Department Stores Co., The Wall Street Journal reported. The two sides are getting closer on a final price-per-share, the paper said. Federated lost 65 cents to $56.72, while May added $1.93 to $33.45.

In earnings news, financial software company Intuit Inc. said its quarterly earnings fell slightly from a year ago due to one-time losses from discontinued operations. The company nonetheless beat Wall Street profit expectations by a penny. Intuit gained 84 cents to $40.95.

Computer graphics chip maker nVidia Corp. climbed $2.76, or 10.82 percent, to $28.27 after seeing its quarterly profits double from a year ago thanks to new products for digital media devices and improved margins. nVidia beat analysts’ forecasts by 4 cents per share.

Options and futures contracts expired Friday, but the “triple witching day” that commonly causes increased volatility failed to stir the markets.

Overseas, Japan’s Nikkei average rose 0.7 percent. In Europe, Britain’s FTSE 100 closed flat, France’s CAC-40 climbed 0.6 percent for the session and Germany’s DAX fell 0.2 percent.

Reuters and the Associated Press contributed to this report.

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