Why These Stocks Missed the Dow's Bounce

A day after the biggest loss of the year for the Dow Jones Industrials (DJINDICES: ^DJI  ) , investors took the opportunity to look on the bright side of things. With favorable economic data on the housing front and assurances from Fed Chairman Ben Bernanke that the central bank isn't going to abandon its efforts to get the economy back on an even keel, the stock market managed to post a fairly strong rebound, gaining back more than half its Monday losses to climb 116 points. Broader market measures were up somewhat less, rising by about half a percent.

Yet among the losing stocks, Dow component UnitedHealth (NYSE: UNH  ) fell 0.5%. Health insurers did especially badly last week, with UnitedHealth dropping 5% on the prospect that the Centers for Medicare and Medicaid Services could slash reimbursement rates next year for Medicare Advantage supplemental insurance policies, and with the debate over sequestration starting to heat up, similar arguments are likely to go on for the foreseeable future. Still, smaller players with greater concentrations to Medicare Advantage could get hit even more, arguably putting UnitedHealth in a more favorable position with its more diversified portfolio of insurance offerings.

Elsewhere, VIVUS (NASDAQ: VVUS  ) fell 12% after reporting a slow quarter of sales for its weight-loss drug Qsymia. With Europe's drug regulatory agency recommending further safety tests for Qsymia last week but also requesting additional information for Arena Pharmaceuticals (NASDAQ: ARNA  ) rival anti-obesity drug Belviq, it's unclear whether either company will make progress in its fight to gain a lasting advantage in the weight-loss market. Arena fell 3% on the day.

Finally, First Solar (NASDAQ: FSLR  ) dropped 4% in advance of its afternoon earnings release, in which it reported record fourth-quarter sales. But revenue guidance for the current quarter of $650 million to $750 million came in well below analyst projections of more than $825 million, and shares initially reacted negatively to the news with further losses in after-hours trading right after the announcement. With the solar industry having bounced back sharply in recent months, First Solar will need to work even harder to produce the growth necessary to keep investors satisfied.

Who will win the obesity drug market?
After today's news from VIVUS, can it pick up its lagging sales this quarter to fend off competition, or will Arena Pharmaceuticals reign supreme in the obesity space? If you're in the dark, grab copies of The Motley Fool's premium research reports on VIVUS and Arena Pharmaceuticals to stay up to date. Senior biotech analyst Brian Orelli gives investors the must-know information, including an in-depth look at the obesity market and reasons to buy and sell both stocks. Click now for an exclusive look at Arena and VIVUS -- complete with a full year of free updates -- today.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 27, 2013, at 2:39 PM, keahou wrote:

    Re ARNA, you need to quit reading Adam's articles and get the real story.

  • Report this Comment On February 27, 2013, at 11:17 PM, Foreeverlong wrote:

    The price of Arena is being artificially suppressed by HF's and Tutes that are working hard to hold down the price of the stock and/or positioning themselves in the stock. The two stocks for those that have closely followed them have no other relationship as to how they have performed. VIVUS is a totally different situation relating back to the danger of the drug and severely restrictive REMS by the FDA. Arena's Belviq is the odds on favorite to win the day, on its own or as a combo-drug with Phentermine or Medformin. It may be equally as valuable as a type II diabetes treatment, in addition to being a safe weight reduction pill. With all due respect, it is misleading to link their performance.

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Related Tickers

10/23/2014 12:25 PM
^DJI $16718.42 Up +257.10 +1.56%
DOW JONES INDUSTRI… CAPS Rating: No stars
ARNA $4.18 Up +0.10 +2.33%
Arena Pharmaceutic… CAPS Rating: ***
FSLR $56.31 Up +1.56 +2.85%
First Solar CAPS Rating: **
UNH $90.66 Up +0.89 +0.99%
UnitedHealth Group CAPS Rating: ****
VVUS $3.37 Up +0.05 +1.51%
VIVUS, Inc. CAPS Rating: **

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