US stocks: Merck helps lift US stocks higher, dollar up

New York - US stocks closed higher on Wednesday, as the dollar strengthened and shares of Merck & Co. helped lift the Dow after the drugmaker gave a forecast that was not as weak as some on Wall Street had expected.

Merck, reeling from the recent withdrawal of its Vioxx arthritis drug, said 2005 earnings would decline, but its stock rose 80 cents, or 2.9 percent, to US$28.69.

Oil prices hitting a four-month low and a rally in the dollar also helped stocks.

The blue-chip Dow Jones industrial average rose 53.65 points, or 0.51 percent, to 10,494.23. The broad Standard & Poor's 500 Index was up 5.74 points, or 0.49 percent, at 1,182.81. The technology-laced Nasdaq Composite Index gained 11.45 points, or 0.54 percent, at 2,126.11.

"The market was reasonably resilient today," said Donna Van Vlack, director of trading at Brandywine Asset Management. "The dollar strengthening was a good thing and investors were clearly impressed with Merck, having expected a worse forecast than what actually came in."

Trading was heavy, with 1.5 billion shares changing hands on the New York Stock Exchange, above the 1.4 billion daily average for last year. About 2.4 billion shares were traded on Nasdaq, well above the 1.69 billion daily average last year.

Advancing stocks led declining stocks on the New York Stock Exchange by about a 3 to 2 ratio, while on the Nasdaq, advancers led decliners by a 9 to 7 margin.

Oil prices see-sawed throughout the session, with NYMEX January crude futures settling 48 cents higher at US$41.94 a barrel after hitting a four-month low of US$40.70 earlier in the day. Oil prices have been on the decline, down from highs above US$55 in October. Wall Street has welcomed the lower oil prices, as declining energy costs tend to help corporate profits.

The dollar rebounded higher as investors took a break from worrying about the US current account deficit and focused on relative interest rates, which increasingly were expected to favor the dollar.

While a declining dollar helps demand for cheaper US products overseas, investors have been concerned the weaker greenback could steer foreign investors away from US assets.

Shares of Martha Stewart Living Omnimedia Inc. rose US$1.55, or 6.8 percent, to US$24.43 after the media and merchandising company said its founder would star in a new syndicated television show to air in fall 2005 after completing her jail sentence for lying about a suspicious stock sale.

Shares of Actel Corp., Xilinx Inc. and Altera Corp. fell after Banc of America Securities lowered its investment rating on seven semiconductor stocks to "sell." Actel was down 95 cents, or 5.5 percent, to US$16.29. Zilinx lost 1.7 percent to US$30.73, Altera 1.9 percent to US$22.20.

Texas Instruments Inc. fell 95 cents, or 3.8 percent, to US$24.05 after the world's largest maker of chips for cell phones said it expects fourth-quarter revenue and earnings per share to be in the middle range of its previous estimates.

Mining stocks fell as the dollar's rebound triggered profit-taking across the metals sector, with Newmont Mining Corp. down 55 cents, or 1.2 percent to US$44.76.

Pixar Animation Studios Inc. fell US$4.29, or 4.7 percent, to US$86.77 after it said it would postpone the theatrical release of its animated feature "Cars" to June 2006 from November 2005.

Shares of Sirius Satellite Radio Inc. tumbled after an investment firm said the stock was overvalued after a rally that nearly tripled its value in the last two months. Shares of Sirius dropped US$2.11, or 23.4 percent, to US$6.90.

- REUTERS