Wall Street was mixed to lower today as traders anxiously awaited Fed chair Janet Yellen’s forthcoming remarks on Tuesday and Wednesday of this week. It’s anticipated that she will reiterate that a rate hike in June is still quite possible.
Not helping matters was the January existing home sales report, which was off 4.9%, the lowest amount in nine months. Analysts were expecting a drop of 1.8%, but sales in the Northeast and West declined more than expected. The National Association of Realtors blamed the drop on “seasonal influences,” low inventory levels and price rises above the inflation level.
The Dow Jones Industrial Average shed 0.1%, while the S&P 500 was flat. The Nasdaq Composite managed to squeeze out a small gain of 0.1%
Healthcare, especially biotechs were strong today, and utilities and consumer goods also were among the best sectors. Aetna Inc (NYSE:AET), Valeant Pharmaceuticals Intl Inc (NYSE:VRX) and Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM) all had solid news boosting them higher, which is why they are three of today’s best stocks.
Aetna Inc (AET)
You have to love the crazy logic of Wall Street when bad news pushes a stock higher. AET stock rose nearly 3% today after the Centers for Medicare and Medicaid Services proposed a decline for Medicare Advantage Plan payments.
So why was there an increase in share price for Aetna stock and other insurers? It turns out that Wall street analysts were expecting a far more severe cost-cutting, and it was even surmised that insurers could actually gain a little bit if they deliver and bill for more intense services to these populations. Go figure.
Today’s gain puts Aetna stock up about 37% since October.
Valeant Pharmaceuticals Intl Inc (VRX)
Over the weekend, Valeant announced it will acquire Salix Pharmaceuticals, Ltd. (NASDAQ:SLXP) for $14.5 billion, paying $158 in cash per share. The deal is expected to increase Valeant’s presence into a high-growth gastrointestinal drug therapy market. VRX will finance the sale with $22.2 billion of bonds and bank loans that will increase its debt substantially. VRX thinks it will add to its revenue growth by about 20%.
VRX stock surged nearly 15% on 19.6 million shares on the news. By contrast, shares of SLXP were down 1.3%. The acquisition should close sometime in the second quarter.
Tower Semiconductor Ltd. (USA) (TSEM)
TSEM stock gapped up 15% after trouncing analysts’ estimates for their fourth-quarter earnings report. The adjusted EPS of 83 cents a share was well ahead of the street’s forecast for 58 cents a share. While revenue of $235.3 million was in line with the analysts’ view, Tower’s revenue was up 75% year-over-year, which set a record for the Israeli chipmaker.
TSEM stock set an all time high of $16.84 this morning, before settling back to close at $15.76.
As of this writing, Ethan Roberts did not hold a position in any of the aforementioned securities.
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