The S&P 500 (SNPINDEX: ^GSPC ) wasn't able to build on its record gains from the previous week, falling just less than two points or about 0.1% during the week. Even as most of the economic data released during the past several days confirmed favorable conditions going forward for the U.S. economy, investors aren't as certain about the prospects for the coming earnings season. Nevertheless, even with those concerns, Vertex Pharmaceuticals (NASDAQ: VRTX ) , Integrys Energy Group (NYSE: TEG ) , and Iron Mountain (NYSE: IRM ) led the S&P 500's strongest performers.
Vertex Pharmaceuticals soared 44% as the biotech company released extremely favorable results in two of its phase 3 trials combining its already-approved Kalydeco with its experimental VX-809 as a treatment for the most common form of cystic fibrosis. As a result of the positive study data, Vertex now expects to file for approval in both the U.S. and Europe by the end of the year. Even before the news, investors had high hopes for Kalydeco's prospects, but with the stock now sporting a huge valuation, Vertex will have to meet even higher expectations going forward in order to justify its current levels.
Integrys Energy Group climbed 16% as the gas and electric utility company got a buyout offer from nearby peer Wisconsin Energy, offering $5.8 billion in cash and stock for the company as well as assuming $3.3 billion in Integrys debt. The result of the transaction will be an expanded service area that will cover much of the Upper Midwest, including portions of Minnesota, Michigan, and Illinois as well as a large part of Wisconsin. By combining forces, Integrys will be able to get upgrades to its distribution and transmission infrastructure more quickly than it could without Wisconsin Energy's ample cash flow. In a low-growth industry, mergers and acquisitions are a smart way to expand your reach, and Integrys shareholders benefited from that fact.
Iron Mountain also gained 16% after the data-management and storage company received approval to convert itself from an ordinary corporation to a real-estate investment trust. The jump shows the value of REIT status, with the pass-through of taxes to shareholders helping to avoid the double taxation that corporations face and leading to more after-tax profits for investors. Interestingly, even as the world moves more toward electronic records and away from paper, Iron Mountain was able to convince the IRS that its "storage" function was adequately connected to real estate, especially given its extensive network of physical locations. Congress might act to limit further conversions in the future, but for now, Iron Mountain should reap the benefits.
Even though the S&P 500 wasn't able to set a new record this week, it nevertheless remains close to its record levels. As the end of the quarter comes on Monday, watch to see if the S&P 500 will set a new high-water mark for posterity.
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