After three days of steep declines, on Wednesday the Nasdaq Composite (NASDAQINDEX:^IXIC) managed to recover some lost ground. Investors were ready for a bounce, and that's what they got. Some hard-hit tech stocks put together big gains, and collectively, they carried the Nasdaq to a rise of nearly 300 points.
The big winner on the Nasdaq was Intra-Cellular Therapies (NASDAQ:ITCI), which had groundbreaking news in an area of the biopharmaceutical industry that had nothing to do with COVID-19 treatment. Meanwhile, shares of lululemon athletica (NASDAQ:LULU) have soared in 2020, but it wasn't able to join the celebration after announcing quarterly results that raised some questions about the coming holiday season.
A big win in the fight against bipolar disorder
Shares of Intra-Cellular Therapies skyrocketed 73% on Wednesday. The biotech announced some trial results that encouraged shareholders about the prospects for a promising treatment.
Intra-Cellular released results from its study of lumateperone in treating patients with bipolar depression. The candidate drug met its primary endpoint of improvement on a commonly used depression rating scale compared to placebo, as well as secondary endpoints and safety profiles.
The company had previously reported positive results from another phase 3 study that used lumateperone exclusively. The study announced today used the treatment in conjunction with other mood stabilizing treatments like lithium or valproate.
Intra-Cellular immediately took advantage of the rise, announcing a $350 million secondary stock offering after the market closed Wednesday afternoon. Yet even that news didn't immediately bring a big reversal to the gains. That shows how excited investors are about the prospects for lumateperone to help patients with bipolar disorders.
A yoga retail letdown
On the down side, shares of Lululemon lost 7%. The yoga apparel retail specialist announced its second-quarter financial results late Tuesday, and although there were a lot of good things in its report, shareholders weren't ready to deal with some concerns about the future.
Lululemon held up well during a tough environment for retail generally. Revenue rose 2% during the period compared to the previous year's quarter. Revenue from retail stores dropped by more than half, reflecting closures throughout much of Q2 because of the COVID-19 pandemic. Yet direct-to-consumer sales made up the difference, soaring 155% year over year.
However, Lululemon didn't emerge unscathed. Although earnings were better than expected, they were still down by nearly a third from year-earlier levels. Moreover, the company expects that expenses are likely to keep rising in the remainder of the year. Higher marketing costs in particular could weigh on the bottom line.
Retail stocks have suffered a lot, but the drop for Lululemon still leaves the share price at more than double its lowest levels in March. Long-term investors don't need to panic about the yoga retailer's prospects for the foreseeable future.