Janet Yellen's first chaired Federal Open Market Committee meeting was certainly a memorable one, with the broad-based S&P 500 (SNPINDEX:^GSPC) hiccuping and heading lower after the FOMC announced its latest policy decisions.


According to Yellen, the FOMC will be further tapering its economic stimulus program, known as QE3, which purchases a combination of long-term U.S. Treasuries and mortgage-backed securities by another $10 billion. This marks the third time in a matter of months that the FOMC has tapered QE3 by $10 billion, and the overall monthly allotment is now down to $55 billion. Investors are certainly sad to see this free money disappearing, but it also signals confidence from the Fed that the U.S. economy is able to stand on its own two feet.

In addition, the FOMC updated its views on long-term federal funds target rates, noting that it would no longer view an unemployment rate target of 6.5% as the sole reason to boost rates, but would, instead, take into account a number of factors. This, in turn, gave investors hope that lending rates wouldn't move higher anytime soon.

Also noteworthy, the Mortgage Brokers Association released its weekly mortgage loan origination indicator, which dipped 1.2% from the previous week. Following a nearly two-decade low in December, it's clear that consumers are treading very cautiously despite lending rates that are historically very low. Unless consumers come around to this realization, when rates do begin to tick higher, banks and homebuilders could be in for a very unwelcome shock.

By day's end, investors' disappointment with another taper won out over the prospect of an improving economy, and pushed the S&P 500 lower by 11.48 points (-0.61%) to close at 1,860.77. Despite the drop, a trio of health-care companies led the charge to the upside today.

Topping that list was Prothena (NASDAQ:PRTA), a clinical-stage biopharmaceutical company focused on advancing therapies to treat diseases that involve protein misfolding or cell adhesion. Prothena shares vaulted higher by 27.5% after receiving a price target hike from RBC Capital to $52 from $38, following its own announcement that it would be presenting an abstract of phase 1 clinical data utilizing NEOD001 for patients with immunoglobulin light chain amyloidosis and persistent organ dysfunction at the International Symposium of Amyloidosis. The data in its abstract will include any interim analyses through the end of March. Investors are clearly thinking that Prothena would be unlikely to make this announcement if the data wasn't good, so they're bidding shares notably higher today. I would, however, urge investors to remain cautious, as NEOD001 is Prothena's only clinical-stage therapy, and the company is already valued at a whopping $1 billion.

Shares of polarizing clinical-stage immunotherapy developer Galena Biopharma (NASDAQ:GALE) also roared higher by 9.2% after research firm Maxim Group came to its defense, and noted that its fundamentals are sound despite its ongoing SEC investigation involving its relationship with a third-party according to Barron's. Maxim analyst Echo He noted that a worst-case scenario would involve some liability with management, but wouldn't affect Galena's actual pipeline. He values Galena's FDA-approved breakthrough cancer pain therapy Abstral at $1/share, its cancer immunotherapy NeuVax at $8/share, and Anagrelide CR at $2/share. I believe it's obvious that Galena isn't without a number of clear risks, which include its ongoing SEC investigation, and the fact that small-cap biotechs have a notoriously poor record of late-stage success in developing cancer therapies. Then again, better-than-expected Abstral sales projections and a deep pipeline if NeuVax proves successful does have the opportunity to send this stock higher.

Finally, Horizon Pharma (NASDAQ:HZNP) gained 9.1% after announcing what is effectively a reverse merger with privately held Vidara Therapeutics that amounts to $660 million in cash and stock. The combined entity will be capable of $250 million-$265 million in revenue, with EBITDA in the $65 million-$75 million range. More importantly, the move is being made because it allows Horizon to incorporate in Ireland, which has significantly lower corporate tax rates, allowing it to keep much more of its profits. We saw a similar move from Perrigo (NYSE:PRGO), which agreed to buy Elan for $8.6 billion in July in order to incorporate itself in Ireland and gain the preferential tax treatment in that country. Overall, it appears to be a smart move for Horizon Pharma, and with the company valued at less than 15 times the midpoint of its forecasted EBITDA, I could actually see further upside potential.

Prothena, Galena, and Horizon all shot higher today -- but even they may struggle to keep up with this top stock in 2014
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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