Will the Dow Hold On?

Thanks to consumer confidence hitting a high not seen since 2008, the market has fought to hold on to the day's gains, in the face of yet another banking scandal. With that in mind, let's take a closer look at how the major indexes are faring and drill down on a few stocks making headlines.

Index

Gain/Loss

Gain/Loss %

Intraday Value

Dow Jones Industrial Average (INDEX: ^DJI  ) (13.47) (0.10%) 12,841.57
Nasdaq 10.11 0.34% 2,943.75
S&P 500 (0.78) (0.06%) 1,357.21

Source: Yahoo! Finance.

The Nasdaq looks poised to finish the week on a positive note, while the Dow and S&P 500 are barely clinging on to positive territory toward the end of the trading session after recovering from a rough start. The drop is largely due to the declines seen in the financial sector spurred on by JP Morgan's (NYSE: JPM  ) surprise conference call after the markets closed yesterday.

The Wall Street bank disclosed a $2 billion derivative trading loss and shares have been punished by more than 8%. Other banking component Bank of America is down less than 1%, as a rough derivative loss at a competitor is hardly a systemic issue. But the episode reinforces the belief that even the best-run Wall Street banks struggle with risk management and raise the specter of "too big to fail."

The big action today is in health care, specifically the biotech space, after an FDA advisory committee recommended approval for Arena Pharmaceuticals' (Nasdaq: ARNA  ) obesity drug lorcaserin by an impressive 18-4 margin. Arena's closest competitor is VIVUS (Nasdaq: VVUS  ) ; its drug Qnexa received a 20-2 thumbs-up, but the FDA delayed a final decision on Qnexa by three months. The overwhelming vote of confidence is a reversal, since both drugs, along with Orexigen's (Nasdaq: OREX  ) Contrave, received lukewarm support and rejection letters from the FDA not that long ago. Treating obesity is a huge market (pun intended), so investors have a right to be excited. Arena is up 73.5% on the news, while the warm glow led to VIVUS shares gaining over 8% and Orexigen climbing an even 20%.

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David Williamson holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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