Wall Street opened higher, with the three major averages remaining in the green at midday. Reopening stocks are leading gains as COVID-19 case counts continue to ease in the U.S. The growth in new coronavirus infections slowed to its lowest pace of the pandemic in the past week, which is an encouraging sign about the effectiveness of the nation's vaccination efforts.
ECONOMIC EVENTS: In the U.S., the Chicago Fed national activity index dropped 1.47 points to 0.24 in April.
TOP NEWS: Shares of Cabot Oil & Gas (COG) fell 6% after the company announced an agreement to combine with Cimarex Energy (XEC) in an all-stock merger of equals. Under the terms of the agreement, which has been unanimously approved by the boards of directors of both companies, Cimarex shareholders will receive 4.0146 shares of Cabot common stock for each share of Cimarex common stock owned. The exchange ratio, together with closing prices for Cabot and Cimarex on May 21, reflects an enterprise value for the combined companies of approximately $17B. Cimarex shares are also 6.5% lower near noon following the deal news.
In other M&A news, Xeris Pharmaceutics (XERS) and Strongbridge Pharma (SBBP) said they reached an agreement under which Xeris will acquire Strongbridge for stock and contingent value rights, or CVRs. The agreement, including the maximum aggregate amount payable under the CVRs, values Strongbridge at approximately $267M based on the closing price of Xeris common stock of $3.47 on May 21, and Strongbridge's fully diluted share capital. Shares of Strongbridge jumped 13% after the news, while Xeris shares declined 4%.
Meanwhile, shares of Virgin Galactic (SPCE) were 18% higher near noon after the company successfully conducted its third spaceflight and the first ever spaceflight from Spaceport America, New Mexico over the weekend. The company said that VSS Unity and its two pilots are now in space. Following the news, Alembic Global analyst Peter Skibitski upgraded Virgin Galactic to Overweight from Neutral, saying he believes the successful spaceflight could drive new share momentum. Saturday's flight was "particularly important" because the prior test in December 2020 failed due to electromagnetic interference issues with the onboard computer, noted Skibitski, who believes the flight is likely to keep Virgin Galactic's test schedule on track.
MAJOR MOVERS: Among the noteworthy gainers was Verastem (VSTM), which rose 17% after the FDA granted the company Breakthrough Therapy designation for the combination of its investigational drug RAF/MEK inhibitor VS-6766, with defactinib, for treating patients with low-grade serous ovarian cancer. Also higher was Beyond Meat (BYND), which gained 10% after Bernstein analyst Alexia Howard double upgraded the stock to Outperform from Underperform and after the alternative meat company and Tesco (TSCDY) announced a partnership.
Among the notable losers was NGM Biopharmaceuticals (NGM) which dropped 37% after its Phase 2b ALPINE 2/3 study did not meet its primary endpoint and the company said it has decided to not pursue associated Phase 3 development of aldafermin. Also lower was Shift (SFT), which fell 14% after announcing its intention to offer $75M aggregate principal amount of convertible senior notes due 2026.
INDEXES: Near midday, the Dow was up 179.51, or 0.52%, to 34,387.35, the Nasdaq was up 201.65, or 1.50%, to 13,672.64, and the S&P 500 was up 43.37, or 1.04%, to 4,199.23.
Virgin Galactic
+3.89 (+18.48%)
Cabot Oil & Gas
-1.22 (-6.85%)
Cimarex Energy
-4.91 (-6.90%)
Xeris Biopharma
-0.17 (-4.89%)
Strongbridge Biopharma
+0.3 (+12.50%)
Verastem
+0.59 (+18.50%)
Beyond Meat
+11.17 (+10.48%)
Tesco
-0.09 (-0.93%)
NGM Biopharmaceuticals
-11.11 (-39.11%)
Shift Technologies
-1.01 (-13.54%)