Merck Stock Plunges on Guidance Cut

Major U.S. equities indexes were mixed for the second straight day as tech stocks lost ground ahead of key earnings reports and a decision on interest rates from the Federal Reserve.

The S&P 500 lost 0.5%, while the Nasdaq dropped 1.3%. The Dow closed Tuesday’s session 1.5% higher, buoyed by a strong performance from several constituents in the financial services sector.

Merck (MRK) shares tumbled 9.8%, posting the steepest decline of any S&P 500 stock Tuesday, after the pharmaceutical giant lowered its full-year earnings forecast. The cut reflected a one-time charge related to the acquisition of ophthalmology biotech company EyeBio. The stock’s losses came despite a solid second-quarter performance, with better-than-expected revenue and earnings driven by growing sales of Merck’s flagship cancer drug Keytruda.

Shares of CrowdStrike Holdings (CRWD) plunged 9.7% following news that Delta Air Lines (DAL) could sue the cybersecurity firm for financial damages related to the global tech outage caused by a CrowdStrike software update earlier this month. Delta has reportedly contracted a law firm to represent the airline and plans to pursue compensation from Microsoft as well as CrowdStrike.

Ecolab (ECL) shares fell 7.7% after the provider of water purification and hygiene solutions fell short of revenue estimates with its second quarter results. Although EPS slightly exceeded forecasts and the company boosted its full-year earnings forecast, the updated outlook missed consensus estimates.

Shares of Howmet Aerospace (HWM), which supplies jet engine components and aluminum wheels for heavy trucks, soared 13.2% following a strong second-quarter earnings report, notching the top daily performance in the S&P 500. Howmet posted better-than-expected sales and profits for the period, with its commercial aerospace division receiving a boost from strong air travel demand and an aging aircraft fleet. The company also increased its share buyback authorization and raised its dividend.

F5 (FFIV) shares jumped 13% after the online security and cloud-based technology firm beat revenue and earnings expectations for its fiscal third quarter. An increase in digitization efforts by companies aiming to capitalize on artificial intelligence (AI) trends helped lift demand for F5’s services and hardware products, while high-profile security breaches and elevated online threat levels led to growing cybersecurity investments.

A strong set of earnings results and an increased outlook also helped lift shares of Stanley Black & Decker (SWK), which added 10% on the day. Second-quarter sales and profits surpassed analysts’ estimates, and the manufacturer of tools and industrial equipment lifted its full-year earnings guidance. Although Stanley Black & Decker said it could see muted demand in the remainder of 2024, it touted its focus on streamlining its supply chains as a way of driving earnings and cash flow growth.