Major benchmarks initially climbed on Monday following a report over the weekend that China offered to purchase a "modest" amount of agricultural products from the United States (after suspending such purchases in early August).
But the market gave up those gains as the day wore on and investors noted the offer would likely be contingent upon the United States both delaying planned tariff increases and easing its own restrictions on Chinese tech giant Huawei. The Dow Jones Industrial Average (DJINDICES:^DJI) closed up slightly, while the S&P 500 (SNPINDEX:^GSPC) ended just barely in the red.
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As for individual stocks, AT&T (NYSE:T) climbed after a notable activist investor took a large stake in the telecommunications giant, while ACADIA Pharmaceuticals (NASDAQ:ACAD) skyrocketed on good news regarding a key new drug study.
Could AT&T go to $60?
Shares of AT&T surged more than 4% early today, then pulled back to close up 1.4% after activist investor firm Elliott Management disclosed a new $3.2 billion stake in the telecom leader. In a letter to AT&T's board of directors, Elliott Management said the enormous purchase "reflects our deep conviction in the extraordinary value opportunity realizable at AT&T today."
The firm further argued that AT&T stock could surge to at least $60 per share -- representing a more than 60% premium from Friday's closing price -- if the company is willing to consider Elliott's suggestions to divest certain noncore assets, improve its operational efficiency, expand its board (with candidates suggested by Elliott), and deleverage its balance sheet while opportunistically repurchasing shares.
It seems likely AT&T will push back on a number of those proposals, particularly the divestments and expansion of its board. But with shares trading roughly flat over the past five years (albeit excluding its healthy dividend, which yields 5.5% at today's prices), it's no surprise to see the stock rallying as investors cheer this renewed pressure by Elliott for AT&T to more aggressively generate shareholder value.
ACADIA's perfect reason to end a drug study early
Shares of ACADIA Pharmaceuticals popped 63.2% today after the biopharmaceuticals leader announced it has stopped a key late-stage drug study early after the drug demonstrated its efficacy.
At the recommendation of the study's independent data-monitoring committee, ACADIA said it decided to stop the phase 3 Harmony trial of its pimavanserin treatment for dementia-related psychosis after the drug met the study's endpoint of "demonstrating a highly statistically significant longer time to relapse" compared with a placebo.
Pimavanserin was previously approved by the Food and Drug Administration for treating hallucinations and delusions associated with Parkinson's disease psychosis under the name Nuplazid. But now ACADIA is planning to meet with the FDA for a supplemental New Drug Application in 2020 that could make it the first FDA-approved drug for the treatment of dementia-related psychosis.
"We are very excited that today's results bring us one step closer to the potential of offering patients with dementia-related psychosis a critically needed treatment option," said ACADIA president Serge Stankovic.