Midday Market Update: ETFs React to Merck Merger | ETF Trends

Markets and exchange traded funds (ETFs) are responding to the news that Merck & Co. (MRK) is buying Schering-Plough Corp. (SGP) for $41.1 billion in a deal that gives Merck key new businesses, which will also help them trim costs, leading to more job losses.

The deal announced Monday would unite the maker of asthma drug Singulair with the maker of allergy medicine Nasonex and form the world’s second-largest prescription drug maker. Linda A. Johnson for the Associated Press reports that Merck hopes the cash-and-stock deal helps it better compete in a drug industry facing slumping sales, tough generic competition and intense pricing pressures. About 16,000 more jobs are to be eliminated.

  • Pharmaceutical HOLDRs (PPH): down 17.3% year-to-date; down 2.1% over one week; Merck 10.23% of assets

Dirk Lammers for the Associated Press reports that oil prices hit new highs for the year Monday as investors geared up for the possibility of more OPEC production cuts. Benchmark crude for April delivery gained $2.01 to $47.53 a barrel on the New York Mercantile Exchange. Prices reached as high as $48.83 earlier in the day.

  • United States Oil (USO): down 15.4% year-to-date; up 3.5% over one week

World Bank is predicting that the global economy is going to shrink this year for the first time since World War II. Edmund L Andrews for The New York Times reports that the World Bank said in a new report that the crisis that began with junk mortgages in the United States was causing havoc for poorer countries that had nothing to do with the original problem.

Emerging and developing nations will be the hardest hit, and bank officials are to release a report that will be published over the next several weeks.

President Barack Obama signed an executive order Monday repealing a Bush-era policy that limited federal tax dollars for embryonic stem cell research. CNN reports that Obama’s move overturns an order signed by President Bush in 2001 that barred the National Institutes of Health from funding research on embryonic stem cells beyond using 60 cell lines that existed at that time.

A presidential memorandum establishing greater independence for federal science policies and programs was also signed by the current president.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.