Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
With earnings season beginning to wind down, investors took the opportunity yet again to take some profits off of the table and pushed the broad-based S&P 500 (^GSPC 1.02%) lower for a second-straight day.
It was a relatively benign day for economic data ahead of tomorrow's information deluge, but what we were privy to was generally good news. The U.S. employment cost index for the third quarter came in at 0.4%, compared to 0.5% in the second quarter, and continues to point toward tame inflation levels -- perhaps even too tame by historical standards for those looking for quicker growth out of the U.S. economy.
Through last week, 92% of the S&P 500 companies had reported their quarterly results, according to FactSet, with 73% topping their earnings-per-share estimates and just 53% surpassing sales estimates. I remain concerned that cost-cutting and share buybacks are driving these beats rather than true organic growth, but the S&P 500 nonetheless remains less than 1% away from an all-time record closing high.
For the day, the index finished modestly lower by 3.66 points (0.20%) to close at 1,787.87.
Topping the list of today's best performing stocks was small-cap biotechnology company Horizon Pharma (HZNP) which skyrocketed 35.6% after announcing that it's spending $35 million to acquire the rights to arthritis drug Vimovo from AstraZeneca (AZN 0.19%). It'll also be responsible for paying royalties to Pozen which has patentable interests in Vimovo. The deal will be financed in part by a $150 million convertible debt offering, but should greatly speed along Horizon's pathway to profitability. I certainly appreciate the deal and Horizon's efforts to beef up its sales growth, but I'd probably wait a quarter or two before jumping on board the bullish bandwagon following Horizon's recent run.
Shares of beaten-down biotechnology company Amarin (AMRN 1.72%) soared 24.8% today following an SEC filing yesterday that its CEO, Joseph Zakrzewski, had purchased 50,777 shares of Amarin's common stock at an average price of $1.54. The overall purchase amount is relatively negligible, but it's an optimistic sign for investors when the CEO backs up the optimistic outlook for the company's lead drug, Vascepa, with a personal share purchase. Admittedly, Vascepa still has a long road ahead of it. A cardiovascular safety trial is going to cost Amarin quite a pretty penny and it's unlikely to be completed before 2017. So while today's move might be a welcome relief for existing shareholders, I don't consider it enough of an affirmation to buy the stock.
Finally, home improvement specialty retailer Tile Shop Holdings (TTSH 2.36%) advanced 9.3% despite a lack of company-specific news. Today's move higher appears to be a rebound from last Thursday when shares were decimated after a report from Gotham City Research insinuated that the company had overstated its earnings by as much as 200%. Tile Shop has denied any alleged wrongdoing, but did note in its rebuttal press release that it has suspended its relationship with China-based Beijing Pingxiu which, according to the reports, is run by the brother-in-law of current Tile Shop CEO Robert Tucker. This just seems like a cloudy situation that I'd rather keep my nose clean of until we have better clarity.
