It was a tough week for stocks. After eking out gains last week, the U.S. indexes gave up those gains and then some. There was some positive data on the U.S. economy, including lower-than-expected initial unemployment claims, better-than-expected manufacturing numbers from the Empire and Philadelphia Fed reports, and slowing consumer price inflation. However, concerns over Europe's ugly situation overwhelmed investors, and they fled stocks.
The Dow Jones Industrial Average (INDEX: ^DJI) slipped 2.6% during the week, while the broader Russell 3000 shed 2.9%. Investors appeared to go with the good old "the best offense is a good defense" tactic this week, and defensive sectors shined ... comparatively, at least.
Top 3 Performing Sectors
|
Russell 3000 Sector |
Weekly Price Change |
Month-to-Date Price Change |
|---|---|---|
| Utilities | (0.2%) | (0.9%) |
| Telecom | (0.4%) | (0.5%) |
| Health Care | (0.5%) | (0.9%) |
Source: S&P Capital IQ. Weekly price change is Dec. 9-Dec. 16. Monthly price change is Nov. 30-Dec. 16.
One stock providing a boost to the health care group was ISTA Pharmaceuticals (Nasdaq: ISTA), which posted a massive 72% surge on Friday. The eye-focused drug developer was on the receiving end of a hostile-takeover bid from Valeant Pharmaceuticals (NYSE: VRX). Valeant offered $6.50 per share for ISTA, but investors bid up shares beyond there, probably expecting that either Valeant will have to pony up more to get the deal done or another buyer will step in and offer a higher price.
Also getting a takeover boost on Friday was RSC Holdings (NYSE: RRR), which spiked 58% at the end of the week after competitor United Rentals (NYSE: URI) announced that it's buying RSC for $18 per share. Unlike the hostile bid in Valeant's offer for ISTA, the boards of directors for both RSC and United Rentals have signed off on this deal. Feeling confident that the deal will get done, investors jacked up RSC's share price to just below the offer price.
Top 3 Performing Russell 3000 Companies
|
Company |
Weekly Price Change |
|---|---|
| ISTA Pharmaceuticals | 69.5% |
| RSC Holdings | 49.2% |
| Synovis Life Technologies | 49% |
Source: S&P Capital IQ. Weekly price change is Dec. 9-Dec. 16.
Also among the week's top performers were Vertex Pharmaceuticals (Nasdaq: VRTX) and Zoll Medical (Nasdaq: ZOLL). Vertex announced that it will do some shuffling in the corner office, as CEO Matthew Emmens will step down in February and Vertex director Jeffrey Leiden will take over. In addition, the company revealed that its cystic fibrosis drug, Kalydeco, received priority review status from the Food and Drug Administration. The FDA is targeting April 18 as its review date.
Zoll shareholders, meanwhile, breathed a sigh of relief this week after Medicare opted to not make any adjustments to its reimbursements for the company's LifeVest product. Zoll shares tacked on 24% for the week.
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