| 2017-01-11 12:10:05|
MRK, BMY… 12:10 01/11 01/11/17
On The Fly: Top stock stories at midday
Stocks began the day with modest gains as investors looked toward the kickoff of the earnings season with a number of big bank reports coming on Friday. Shortly after the open, the Dow began to firm and add to its opening gains. The weekly energy inventory report showed a larger than expected build-up of crude oil inventories, which initially pushed the price of crude lower. The knee-jerk reaction lasted just a short time before oil prices reversed and moved back to session highs. The Dow gained as much as 100 points before President-elect Trump began his press conference and immediately said he would go after better drug prices for the government. The statement took a bite out of the stock's of several large drugmakers and biotech companies, leading to a market reversal that saw the major averages give up all of their earlier gains. The indexes are recovering, however, as Trump continues conducting his first news conference of the year. ECONOMIC NEWS: In the U.S., the weekly MBA mortgage market index jumped 5.8%. Crude oil inventories showed a 4.1M build versus the consensus call for a 1.5M build last week. COMPANY NEWS: Shares of Merck (MRK) were up nearly 3% at noon, though that is well off the stock's earlier high, after the company announced the Food and Drug Administration has accepted for priority review its application for its immunotherapy drug Keytruda with chemotherapy as an initial treatment for advanced lung cancer. Conversely, Bristol-Myers (BMY), who is developing a competing immuno-oncology therapy, dropped about 4% following the news. Just as Merck and Bristol are near their worst levels of the day near noon, several of their large-cap pharmaceutical peers are also moved downward after President-elect, Donald Trump said that the drug industry is "getting away with murder" in terms of pricing of drugs in the U.S., adding "We are going to start bidding, we are going to save billions of dollars." Mallinckrodt (MNK), Mylan (MYL), Endo (ENDP), Eli Lily (LLY), GlaxoSmithKline (GSK), Johnson & Johnson (JNJ), Novartis (NVS), Pfizer (PFE), and Sanofi (SNY) all pulled back after Trump's comments as well... Exxon (XOM) and AT&T (T) were downgraded to neutral-equivalent ratings by Wells Fargo and Deutsche Bank, respectively, today. The downgrades of the two members of the Dow Jones Industrial Average follow a number of rating cuts of other Dow components, including Coca-Cola (KO) and Goldman Sachs (GS), and come on the same day that former Exxon Mobil CEO Rex Tillerson is testifying before the Senate Foreign Relations Committee regarding his nomination to become Secretary of State in the upcoming administration. MAJOR MOVERS: Among the notable gainers was Workday (WDAY), which advanced almost 9% before being halted for news pending. This morning, William Blair analyst Justin Furby told investors that he learned from some of its partners that the company has recently signed a mega retailer, with over two million employees. While the analyst did not name the retailer, Walmart (WMT) may be the only public company to fit the description. Also higher was Derma Sciences (DSCI), which gained 39% after the company announced it has signed a definitive agreement whereby it will be acquired by Integra LifeSciences (IART) for $7.00 per share of common stock in cash, or a total of approximately $204M. Following the news, Integra LifeSciences has dropped over 3%. Additionally, United Continental's (UAL) rose nearly 3% after it reported preliminary December and fourth quarter traffic data. Among the noteworthy losers was SUPERVALU (SVU), which slid about 8.5% after the company's third quarter results missed estimates. Also lower was Ethan Allen Interiors (ETH), which dropped more than 8% after announcing worse than expected second quarter guidance. Additionally, Signet Jewelers (SIG) dropped about 4% after reporting disappointing holiday season same-store sales and giving a downbeat 2017 outlook. INDEXES: Near midday, the Dow was up 79.08, or 0.4%, to 19,934.61, the Nasdaq was down 0.10 to 5,551.72, and the S&P 500 was up 2.52, or 0.11%, to 2,271.42.
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