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Why Alcoa, Merck, and Agios Pharmaceuticals Jumped Today

By Dan Caplinger - Apr 9, 2018 at 4:32PM

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On a positive day for the market, these stocks outperformed. Find out why.

The stock market once again bounced back from adversity on Monday, notching small gains after Friday's brutal sell-off. Major benchmarks were up a half percent or less, but investors generally took heart from the fact that the trade tensions between China and the U.S. didn't get any worse over the weekend. They're also starting to look forward to the imminent beginning of earnings season, which will represent the first chance that most get to see the positive impact of tax reform on corporate profits. Among individual stocks, Alcoa (AA), Merck (MRK 0.74%), and Agios Pharmaceuticals (AGIO 0.86%) were among the best performers on the day. Here's why they did so well.

Alcoa benefits from new sanctions

Shares of Alcoa climbed 5% after the aluminum giant benefited from trade sanctions that the U.S. imposed on one of its Russian peers. New sanctions from the U.S. Treasury Department were aimed at Russian companies that allegedly played roles in various types of Russian aggression, including the annexation of Crimea and interference in the 2016 elections. Russian aluminum giant Rusal was hit especially hard by the sanctions, losing about half its value and helping to send the entire Russian stock market sharply lower. The resulting rise in aluminum prices will benefit Alcoa and its peers outside Russia, and shareholders apparently believe that the move will stay in place for some time.

Alcoa booth at an industry conference, with blocks of crushed recycled aluminum cans featured in the foreground.

Image source: Alcoa.

Merck gets good trial results

Merck stock gained 5% in the wake of positive trial results for the company's Keytruda cancer treatment. An interim analysis from the data monitoring committee overseeing the phase 3 study said that Keytruda achieved its primary endpoint of overall survival as a monotherapy in patients with locally advanced or metastatic non-small cell lung cancer. Keytruda has already been approved to fight cancer, but analysts believe that Merck is doing a better job than its rivals of establishing itself as the pre-eminent company with its anti-PD-1 therapy. Moreover, if it can extend the range of indications for which Keytruda is approved, Merck could capture even more of its potential addressable market.

Agios benefits from speculation

Finally, shares of Agios Pharmaceuticals rose 10%. The news earlier today that Novartis had made an acquisition bid for AveXis caused speculation that other players in the pharma and biotech industry could make similar moves. In particular, some named Celgene (CELG) as potentially being in the market to buy out a smaller peer in the space, and Agios was just one of several names suggested. There's no certainty that a deal will go through or that Agios will be part of it, but with Celgene already engaged in a collaboration with Agios, it'll be interesting to see what (if anything) the biotech giant chooses to do.

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Stocks Mentioned

Merck & Co., Inc. Stock Quote
Merck & Co., Inc.
MRK
$93.00 (0.74%) $0.68
Alcoa Inc. Stock Quote
Alcoa Inc.
AA
Agios Pharmaceuticals, Inc. Stock Quote
Agios Pharmaceuticals, Inc.
AGIO
$22.33 (0.86%) $0.19
Celgene Corporation Stock Quote
Celgene Corporation
CELG

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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