$17 Billion Selloff…In 2 Stocks!
Stocks were lower,
consolidating three days of gains. The
Biotech sector was in focus after an MS drug was withdrawn.
An afternoon rally erased some of the
early losses. Oil made a 2005 high.
Biogen Idec
(
BIIB |
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PowerRating) and Elan
(
ELN |
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their MS drug Tysabri because of adverse events. A patient taking the drug died
recently. ELN is down 68% and BIIB is down 20%. Biogen had hoped Tysabri
would generate $2 billion/year in sales. Total market cap lost today in the two
stocks: $17 billion. Teva Pharmaceuticals
(
TEVA |
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PowerRating) and Serono
(
SRA |
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PowerRating)
make competing drugs.
General Motors
(
GM |
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PowerRating) and Ford
(
F |
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PowerRating) were downgraded to ‘sell’
at Bank of America.
Federated Department Stores
(
FD |
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PowerRating) will buy May Department Stores
(
MAY |
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PowerRating) for $11 billion. The deal, which values May at $35.50, creates the
largest US department store chain.
Yellow Roadway is buying USF Corp. for $1.37 billion in cash
and stock.
January personal income fell -2.3%; personal
spending was unchanged. The Chicago PMI came in at 62.7 for February vs. 62.4 in
January. New home sales fell 9.2% in January to an annual rate of 1.106 million
units.
Trader talk: M&A activity continues, there appears to be confidence in the
boardroom, the rally continues in energy and metals stocks, which have pricing
power. For the month of February, energy stocks rose +18.3%, steel stocks rose
14% and metals stocks rose +12.5%. Here is the past 3 months’ M&A activity:
December, $147 billion; January, $139 billion; February, $72 billion.
In the Nasdaq for February, the SOX rose 10%, INTC was +8.5%, AMAT, +12%.
AMZN was the big loser at -18%; EBAY lost 21% and SIRI fell 20%. Short interest
in Nasdaq shares rose 6% in February. The VIX is at a 20-year low.
ExxonMobil
(
XOM |
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PowerRating) gained $80 billion in market value in February.
A UBS survey indicated investor confidence rose in February.
Strong sectors were: Hardware
(
$HWI.X |
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PowerRating)
+1.25% Internet
(
$GIN.X |
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PowerRating) +0.41%
Transports
(
$TRANX.X |
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PowerRating) +1.05%
Weak sectors were: Biotech
(
$BTK.X |
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PowerRating)
-5.40% Airlines
(
$XAL.X |
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PowerRating) -1.66%
Homebuilders
(
$HGX.X |
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PowerRating) -1.57%
| Dow | -75.37 | 10,766.23 |
| Nasdaq | -13.68 | 2051.72 |
| S&P 500 | -7.80 | 1203.57 |
The dollar was -0.20 at
82.46
Crude Oil was +0.26 at
51.75
Gold was -1.40 to 435.30
2.1 billion on the Nasdaq.
Market breadth was negative.
| NYSE | Issues | |
| Advancing | 1362 | Up Vol 518 |
| Declining | 1992 | Down Vol 990 |
| 1.46 | 1.91 | |
| Nasdaq |
||
| Advancing | 1207 | Up Vol 780 |
| Declining | 1926 | Down Vol 1107 |
| 1.59 | 1.41 |
Stocks in the News
Tiffany
(
TIF |
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PowerRating) beat by 0.02, but sees a lower Q1.
Wal-Mart
(
WMT |
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PowerRating) sees February sales up 4%
Heinz
(
HNZ |
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PowerRating) beat by a penny.
Brice Wightman