Stock Market Today: Dow Outperforms as Merck Hits New High

Volume started to thin out Wednesday ahead of the long holiday weekend. As a reminder, the stock and bond markets will be closed Friday for the Good Friday holiday. 

Those market participants that stuck around today were in a relatively upbeat mood, with the main indexes finishing higher across the board. 

At the close, the Nasdaq Composite was up 0.5% at 16,399. The S&P 500 was 0.9% higher at 5,248, a new record high, while the Dow Jones Industrial Average outpaced its peers, adding 1.2% to 39,760 as pharmaceutical giant Merck (MRK) popped. 

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Merck hits record highs on regulatory win

Indeed, Merck was the best Dow Jones stock today, jumping 5% to a record-high close of $131.75 after the Food and Drug Administration (FDA) approved Winrevair, the company's treatment for pulmonary arterial hypertension. 

The approval came without any additional label requirements beyond an anticipated one for monitoring, prompting a sigh of relief among investors, says BofA Securities analyst Geoff Meacham (Buy). The analyst sees upside to Winrevair's approval and estimates sales to hit $4.7 billion by 2030.

GameStop sinks on Q4 miss

In other single-stock news, GameStop (GME) took a notable dive, shedding 15% after earnings. The video game retailer reported fourth-quarter earnings of 22 cents per share on revenue of $1.79 billion, missing analysts' estimates for earnings of 30 cents per share on $2.05 billion in sales.

"Despite a quarter that featured an extra week and modestly positive industry trends, GameStop delivered a large sales decline [-24% year-over-year] as it continues to deal with a mix shift in software sales, declining hardware sales, fewer large console releases and the growth of subscription services," says Wedbush Securities analyst Michael Pachter (Underperform, the equivalent of Sell). 

GME's fate isn't likely to be sealed in the next 12 months, Pachter adds, "but we expect the company's demise at some point later this decade."

PCE, Powell on deck

Looking ahead, Thursday's economic calendar features a few noteworthy reports, including the final reading on first-quarter gross domestic product (GDP) and the University of Michigan's March Consumer Sentiment Index.

However, the key data point is February's Personal Consumption and Expenditures (PCE) Price Index, the Fed's favorite inflation indicator that tracks consumer spending, which will be released Friday morning. This will be followed by a late-morning speech from Federal Reserve Chair Jerome Powell. 

Sticky inflation data has pushed back expectations for the first quarter-point rate cut to June vs May. However, the Fed's "dot plot" released last week showed most central bank officials still anticipate three quarter-point cuts to the federal funds rate this year despite their slightly elevated inflation expectations. 

Considering Friday is a stock market holiday, the outcome of the PCE data and Powell's speech could lead to a volatile start to Monday's session.

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