Commodities drag on sluggish Wall St

US stocks edged lower yesterday, hurt by a slide in drugmaker Merck and as falling commodities prices hit shares of natural resource companies.

The S&P 500, however, held near 28-month highs as investors saw stocks’ upward trend continuing, focusing on expectations for strong earnings.

Intel confirmed those bets as it posted better-than-expected quarterly earnings and forecast strong revenue for the coming quarter after the closing bell. Its shares rose 2.7 per cent to $21.87 following an 0.06 per cent dip during regular trading hours.

Copper prices fell from recent highs during the session on concerns over slowing demand from China. Freeport McMoRan Copper & Gold lost 3.1 per cent to $118.07, and the S&P materials sector fell 0.8 per cent.

Merck dropped 6.6 per cent to $34.69, accounting for more than half the losses in the Dow industrials, after it stopped giving a blood clot preventer, one of its most important experimental drugs, to some patients.

Marathon Oil gained six per cent to $42.98 after it said it would spin off its refinery and pipeline operations into a stand-alone company.

JPMorgan fell 0.6 per cent to $44.45 ahead of its results, expected before the market’s open. Its shares have risen 4.8 per cent so far this year.

Weekly initial jobless claims jumped to their highest level since October last week, although a surge in exports to their highest level in two years helped narrow the US trade deficit in November, an encouraging sign for the current earnings season.

Recent worries about the credit crisis in Europe eased yesterday as Spain and Italy followed Portugal with successful debt sales. The euro rose 1.7 per cent against the US dollar, its best day in six months.

The S&P 500 has gained 22.3 per cent since the start of September. Earnings from S&P 500 companies are expected to rise 32 per cent in the fourth quarter compared to a year ago.

The Dow Jones industrial average fell 23.54 points, or 0.20 per cent, to 11,731.90. The Standard & Poor’s 500 Index dropped 2.20 points, or 0.17 per cent, to 1,283.76. The Nasdaq Composite Index dipped 2.04 points, or 0.07 per cent, to 2,735.29.