Tuesday turned out to be a relatively quiet session on Wall Street, as the S&P 500 and other major benchmarks made modest gains to continue their impressive summer rally. Between favorable economic data and continued confidence in the lasting power of a bull market that's approaching its 10th anniversary, investors seem inclined to accentuate the positive and ignore worries about future setbacks. Yet a few stocks did lose ground due to bad news affecting individual companies. Canopy Growth (CGC 3.57%), Mitek Systems (MITK -0.27%), and Ionis Pharmaceuticals (IONS 2.21%) were among the performers in the market. Here's why they did so poorly.
Canopy loses some of its high
Shares of Canopy Growth fell 7% as investors tried to put recent news in the marijuana industry into a broader context. Canopy was fortunate enough to get a major investment from spirits giant Constellation Brands, which went a long way toward validating its prospects for the future. Yet many of Canopy's peers also saw their stocks climb in the wake of the deal, as shareholders hoped that they would also attract buyout offers. Today, investors seem to be cooling off on the idea of an M&A gold rush in marijuana, but just about the only thing Canopy shareholders can be sure of is that volatility is likely to continue for the foreseeable future.
Mitek suffers an executive exodus
Mitek Systems stock plunged 16% after the digital identity verification specialist said that two of its top executives were leaving the company. According to a press release, CEO Jim DeBello will make a transition out of his executive role effective Jan. 1, with Bruce Hansen taking over as chairman of Mitek's board in order to facilitate the transition process. At the same time, CFO Jeff Davison also told the company that he will leave as of the end of November to pursue another opportunity near his Montana home. Investors found the simultaneous announcement disquieting, especially in light of the rocky road the stock has seen over the past year.
Ionis looks less healthy
Finally, shares of Ionis Pharmaceuticals plummeted 16%. The pharmaceutical company suffered a significant setback when the U.S. Food and Drug Administration rejected an application for approval of candidate treatment Waylivra, which was submitted to help lower triglyceride levels in patients suffering from an unusual genetic disorder. The company, along with partner Akcea Therapeutics, had scraped out a close positive vote from the FDA advisory committee that considered the drug before it went to the full body for approval, but it's uncertain exactly what motivated the final rejection decision. At this point, shareholders have to wait and see whether Ionis can find a way forward for Waylivra without major delay and cost.