The threat of sequestration kicking in tomorrow, and resulting in $85 billion in budget cuts, proved to be just enough to drag the broad-based S&P 500 (^GSPC 0.02%) lower after the index spent much of the day in positive territory.
On the economic front, sequestration aside, initial jobless claims fell 22,000, to 344,000, which proved much lower than analysts had expected. Lower jobless claims would signal that the job market is slowly improving, and that unemployment rates may eventually head lower sooner rather than later. Also, fourth-quarter U.S. GDP was revised higher, from an initial estimate of -0.1% growth, to positive 0.1% growth. While not as high as investors had hoped, the simple psychology behind positive growth was enough to get people excited.
All told, sequestration fears trumped the aforementioned bullish news, and sent the S&P 500 modestly lower by 1.31 points (-0.09%), to close at 1,514.68. Although we finished the day slightly lower, three stocks really stood out to the upside.
Generic drugmaker Mylan (MYL) was today's biggest gainer, rising 3.6%, after reporting its fourth-quarter earnings results and announcing the $1.6 billion purchase of Agila Specialties from Strides Acrolab. For the quarter, Mylan reported a 13% increase in total revenue and a 23% increase in adjusted EPS, and continued a five-year streak of delivering double-digit revenue and EBITDA growth based on year-over-year results. As for Agila, it will provide Mylan with another generic avenue of growth. Agila makes generic injectable drugs, and should help further secure its lead as a generic drug powerhouse. At roughly 10 times forward earnings, it could still be a steal of a deal.
Shares of health-benefits provider Express Scripts (ESRX) advanced 2.7% on the day on the heels of potentially bad news for one of its rivals, Catamaran (CTRX.DL). In Catamaran's conference call, its management team noted the potential -- though unlikely according to CEO Mark Thierer -- that CIGNA may not renew its contract with Catamaran, implying that it might take its insurance business completely in-house. In a case of one company's pain is the other's gain, shares of Express Scripts were sent higher on the potential loss for Catamaran. The Affordable Care Act should be a win-win for most health-care benefits providers, as it brings millions of newly insured into the folds, so I wouldn't read too much into today's short-term moves of either Catamaran or Express Scripts.
Finally, land-based oil and gas drilling contractor Nabors Industries (NBR -0.65%) got shareholders' blood pumping when it announced that it would begin paying a quarterly dividend. The $0.04 per quarter stipend places the annual yield at roughly 1%, and gives investors another reason to bet big on President Obama's move toward an energy independent U.S. At just 10 times forward earnings, Nabors definitely could have room to head higher still, after its 2.7% tick higher today.
