The stock market got a big boost of confidence last week, as investors seemed to get more comfortable with the likely future course of monetary policy. Although most market participants expect the Federal Reserve to boost interest rates even further in the coming months, they're growing increasingly convinced that the central bank will have to reverse course within the next year or so in order to support the economy. That led the Dow Jones Industrial Average (^DJI 0.23%), S&P 500 (^GSPC 0.80%), and Nasdaq Composite (^IXIC 1.14%) sharply higher late last week, and as of 9 a.m. ET Monday, futures on all three indexes were modestly higher.
A lot of investors have watched Warren Buffett closely in recent months, as his Berkshire Hathaway has bought up more and more shares of oil and gas giant Occidental Petroleum (OXY 1.24%). Berkshire confirmed its sizable ownership position in Occidental late last week, and perhaps because of some confusion among investors, its shares moved higher again. Yet the big mover on Monday among mega-cap stocks was in the healthcare field, as Bristol Myers Squibb (BMY 0.28%) made an announcement that had shareholders celebrating.
Buffett reports his big energy holding -- again
Shares of Occidental Petroleum were up more than 2% in premarket trading early Monday. The company has been in the spotlight all year because of the rising interest from Buffett and Berkshire in its stock, as well as because favorable energy markets have dramatically improved its financial performance.
The move came amid some confusion about the latest news about the relationship between Buffett and Occidental. The size of Berkshire's position in the energy stock requires it to provide periodic updates on its ownership stake when it makes purchases, and late Friday in a filing with the U.S. Securities and Exchange Commission (SEC), Berkshire reported its holdings totaling 272.2 million shares. That figure includes warrants that Berkshire can convert to Occidental common stock at its election, with the filing indicating that its total holdings comprise a 26.8% stake in the oil and gas company overall.
Some news sources took that as a sign that Berkshire had increased its stake from its previously reported 20.2% position. Yet the total share position matches what Berkshire reported to the SEC in early August, when the company acquired nearly 6.7 million shares.
It's likely that the confusion stems from the intervening filing Berkshire made in mid-August, which reflected Occidental holdings as of June 30 that didn't include the purchases since then. In addition, the treatment of Berkshire's warrants to purchase additional stock is also likely inconsistent across media sources.
Regardless, Berkshire has received permission to own as much as 50% of Occidental's stock. Whether that will happen remains to be seen, but it's clear that Buffett still believes the oil and gas giant is a good play in today's market environment.
Bristol gets good news
Shares of Bristol Myers Squibb moved higher by 7%, making it a big winner among the largest companies in the market. The drugmaker reported a key decision on a candidate treatment that could mean a sizable sales boost.
Bristol reported late Friday that the U.S. Food and Drug Administration (FDA) had approved the use of its Sotyktu oral treatment for adults with moderate to severe plaque psoriasis. The move came after two key phase 3 clinical trials of the drug showed that Sotyktu showed superior efficacy both over a placebo and over Amgen's competing treatment, Otezla.
Investors are excited about the opportunity for Bristol to control a large market. Psoriasis affects 7.5 million people in the U.S. alone, and as the first oral treatment approved by the FDA in nearly a decade, Bristol Chief Medical Officer Samit Hirawat believes Sotyktu represents a new standard of care for those who suffer from the disease.
Bristol Myers Squibb's stock has held up well in 2022, climbing substantially since the beginning of the year in a down market. Breakthroughs like this are the reason why, and investors are hopeful that more good news will come for Bristol.