* Merck, Schering-Plough lead pharmaceuticals lower
* Bank of America beats earnings estimates
* Dow down 0.5 pct, Nasdaq down 0.4 pct, S&P down 0.2 pct
(Updates to afternoon, changes byline)
By Kristina Cooke
NEW YORK, July 21 (Reuters) - U.S. stocks fell on Monday,
as the price of oil rose and Merck and Schering-Plough led
pharmaceuticals shares lower, overshadowing gains in the banks
after Bank of America's <BAC.N> stronger-than-expected
results.
Merck and Co <MRK.N> and Schering-Plough's <SGP.N> shares
fell after its cholesterol fighter Vytorin failed to meet the
main goal of improving cardiovascular outcomes in a closely
watched heart study. The two drugmakers had delayed the
release of their quarterly earnings to after the close of
trading so investors could first learn the study's outcome.
The price of oil further dampened the mood as it rose
about $3 a barrel, adding to concerns about the impact of
higher fuel costs on consumer spending. The S&P retail index
<.RLX> fell 1.9 percent.
But bank stocks rose after Bank of America's results beat
Wall Street's estimates, following last week's
stronger-than-expected quarterly results from Wells Fargo
<WFC.N>, JPMorgan Chase <JPM.N> and Citigroup <C.N>.
"The Merck news is specific to that sector -- you also
have oil gaining again which is hurting retailers and the
broader market," said Robert Francello, head of equity trading
for Apex Capital hedge fund in San Francisco.
"But financials are doing well after Bank of America's
surprisingly strong earnings, so that is helping the market."
The Dow Jones industrial average <> fell 54.80 points,
or 0.47 percent, to 11,441.77. The Standard & Poor's 500 Index
<.SPX> dropped 2.87 points, or 0.23 percent, to 1,257.81. The
Nasdaq Composite Index <> was down 7.89 points, or 0.35
percent, at 2,274.89.
Technology companies were also weak following
disappointing earnings from Google <GOOG.O> and Microsoft
<MSFT.O> last week. Shares of iPod maker Apple Inc <AAPL.O>,
which is scheduled to report earnings after the closing bell
on Monday, fell 1 percent to $163.50 and was among the top
drags on the Nasdaq.
Shares of Yahoo Inc <YHOO.O> fell 3.4 percent to $21.69 on
Nasdaq. The Internet company agreed to appoint investor Carl
Icahn and two of his nominees to its board. The move settles a
proxy battle and makes prospects for an immediate transaction
with Microsoft Corp <MSFT.O> less likely. Microsoft shares
slipped 1.1 percent to $25.57. For details see
[].
Financial shares were up for a fourth straight day.
Bank of America shares rose 5.6 percent to $29.02 on the
New York Stock Exchange and followed other positive earnings
surprises by banks last week. [].
Shares of insurer American International Group <AIG.N>
jumped 6.8 percent to $26.77 after Bank of America raised its
rating to "buy" from "neutral."
In the drug sector, though, shares of Merck slid 7.3percent to $34.93 and Schering-Plough sank 15 percent to
$18.23.
No significant difference in the study's composite goals
was seen between the patients who received Vytorin and those
who received a placebo, according to data presented on Monday
in London by its primary researcher, Dr. Terje Pedersen of
Ulleval University Hospital in Oslo, Norway.
In other drug company news, Swiss pharmaceutical company
Roche offered to buy all the outstanding shares of U.S.
partner Genentech Inc <DNA.N>, the world's second-largest
biotechnology company, that it doesn't already own for nearly
$44 billion. Genentech shares jumped almost 13.2 percent to
$92.65 on the NYSE. []
(Reporting by Kristina Cooke; Editing by Jan Paschal)
