Already on shaky ground, stocks suffered again on Thursday as traders continue to see the glass as half-empty rather than half-full. This time around, Sweden was the bulk of the inspiration.
The country’s central bank had already implemented a sub-zero interest rate in an effort to restore some healthy inflation within the nation.
Thursday, however, it pushed those rates deeper into negative territory, making it easier for other nations to do the same, possibly disrupting the global economy. Though the market bounced back a bit from its intraday lows, the S&P 500 still finished the day down 1.23% at 1829.05.
Leading the bearish charge on Thursday were Mylan NV (NASDAQ:MYL), Boeing Co. (NYSE:BA) and Incyte Corporation (NASDAQ:INCY), though all fell for company-specific reasons.
Mylan NV (MYL)
Whether it was a poor fourth-quarter earnings report or an ill-advised acquisition — or a combination of both — that did the damage today isn’t clear. What is clear is that Mylan NV shareholders didn’t like the news, sending MYL shares lower by more than 18% on Thursday.
In its fiscal Q4, pharmaceutical company Mylan earned $1.22 per share on revenue of $2.49 billion. While sales as well as earnings were both up by double digits on a year-over-year basis, they still fell short of analysts’ estimates. Pros were calling for a bottom line of $1.28 per share of MYL, and revenue of $2.7 billion.
Fanning the bearish flames for MYL today was the announcement that the company would be acquiring Swedish drugmaker Meda AB for $7.2 billion in cash and MYL stock That’s more than 90% greater than Meda’s closing price on Wednesday, leading some observers to criticize the deal as a “wealth destroying decision.”
Incyte Corporation (INCY)
MYL wasn’t the only pharma stock to lose plenty of ground today. Incyte Corporation shares also finished the session deep in the red, not because of four earnings in its prior quarter, but in spite of encouraging quarterly numbers.
In its recently completed fiscal fourth quarter, Incyte earned 29 cents per share on revenue of $243.9 million. That handily topped expectations for a profit of only seven cents per share and sales of $220.1 million.
Nevertheless, traders sent INCY shares 11% lower on Thursday following news that the biopharma company was halting clinical trials of Jakafi, or ruxolitinib, as a therapy for solid tumors due to a lack of effectiveness
Boeing Co. (BA)
Finally, Boeing shares lost nearly 7% today when reports surfaced that the SEC was probing the aircraft manufacturers accounting practices.
Although not criminal in nature, the SEC has questions regarding the company’s so-called “program accounting” for its 787 and 747 jets. The heart of the concern is the way in which this accounting practice may unduly redistribute the airplanes’ initial costs over several years, obscuring the accurate picture of what it costs to build these planes, and how well they’re generating revenue. The practice specifically opens the door to potentially misleading numbers.
The probe was announced just a day after Boeing warned it may be cutting jobs… another red flag by that the company is struggling.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.
