Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The stock market began December with modest losses, with most market benchmarks losing between a quarter-percent and half-percent on the day. Most blamed nervousness about the holiday season and ongoing uncertainty about the future course of interest rates for the decline, but even those worries weren't enough to hold down shares of Olin (NYSE:OLN), Forest Laboratories (UNKNOWN:FRX.DL), and ProShares UltraShort Silver (NYSEMKT:ZSL). Let's take a closer look at all three stocks to see what pushed them so much higher.
Olin rose 8%, although the news that pushed it higher related to one of its rivals. Dow Chemical (NYSE:DOW) said this morning that it would break off a portion of its chlorine operations from the rest of its business, following in the footsteps of other chemical giants that have made moves to emphasize higher-margin businesses. Dow rose 2% today, but Olin rose even further because its smaller scope arguably gives it more room to rise either by taking advantage of Dow's spinoff or by making strategic moves of its own.
Forest Labs gained 10% as investors applauded a couple of moves from the drugmaker. The company announced that it would undergo a major restructuring, which will involve cutting 500 jobs as part of a massive plan to reduce costs by $500 million. Forest also plans to increase its leverage level by issuing $1 billion in new debt, with expectations to use the proceeds partly to repurchase stock. Moreover, Forest Labs agreed to pay Merck (NYSE:MRK) $240 million in exchange for the rights to market schizophrenia and bipolar-disorder drug Saphris in the U.S., with potential extra payments based on possible future sales milestones. The combination of moves seems calculated to make shareholders happier about Forest's prospects going forward, as new CEO Brenton Saunders makes his future strategy known.
ProShares UltraShort Silver climbed 9% on a terrible day for the precious-metals market, as gold prices sank to their worst levels since mid-year and are in danger of setting lows not seen since 2010. As often happens, silver fell even more sharply, with spot prices falling about 4% sending this double-inverse leveraged ETF higher by roughly twice that percentage. Silver's woes throughout 2013 have caused this ETF almost to double so far this year, and even with production starting to drop as a result of the plunge in metals prices, further weakness in silver could translate to even more gains for the ProShares ETF.
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