Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
Hasta la vista, poor start to the New Year! With multiple health-care sector stocks exploding to the upside and macroeconomic data working in favor of optimists, the S&P 500 (SNPINDEX:^GSPC) managed to kiss its three-day losing streak goodbye.
While not an exciting day for macro data, today's release of the November trade balance showed a decline in the trade deficit to just $34.3 billion, its lowest level since October 2009. A shrinking trade deficit is important, because it signifies growing overseas interest in American products and also could point to ongoing strength in the U.S. economy.
Couple this data with the fact that the U.S. Senate confirmed the appointment of Janet Yellen as the new chairperson of the Federal Reserve once Ben Bernanke's term expires on Jan. 31, and you have more than enough reason for investors to be excited. Investors like certainty, and things have been laid out in a very easy-to-understand fashion for investors in recent months.
By day's end, the S&P 500 moved higher by 11.11 points (0.61%) to close at 1,837.88, its first gain in 2014.
Screaming higher today and leaving all other companies in its dust was Neurocrine Biosciences (NASDAQ:NBIX), which skyrocketed 89.7% after delivering positive results for its VMAT2 inhibitor, NBI-98854, as a treatment for tardive dyskinesia, an ailment characterized by abnormal and involuntary muscle movements. The mid-stage study showed a statistically significant reduction in symptoms with a 2.6 point reduction in the Abnormal Involuntary Movement Scale, compared with just a 0.2 point reduction for the placebo at the six-week mark. Also, the responder rate in the NBI-98854 intent-to-treat group was 49% compared with 18% in the placebo arm with 67% of those taking NBI-98854 being deemed "much improved" or "very much improved" relative to just 16% for the placebo group. With few tardive dyskinesia treatments available, Neurocrine's drug could have enormous implications for patients and investors.
Biopharmaceutical company Epizyme (NASDAQ:EPZM) advanced by 75.6% after announcing late yesterday that its DOT1L inhibitor for acute leukemias, EPZ-5676, had met its proof-of-concept milestone. This milestone, based on objective responses in patients with translocations of the MLL gene, will necessitate a $25 million payment from collaborative partner Celgene, which has rights to EPZ-5676 outside the United States. Epizyme also announced an additional $4 million milestone payment from GlaxoSmithKline based on an ongoing collaborative effort between those two companies, outlined a plan to run five clinical proof-of-concept trials in 2014, and upped its year-end cash guidance to $145 million from $115 million. The big news, of course, is EPZ-5676 which clearly had to deliver strong results otherwise Celgene wouldn't be making a milestone payment. As for me, I'd strongly suggest holding back your optimism until we've seen some concrete data as the actual results could vary greatly from today's overwhelming optimism.
Finally, fuel cell systems developer Plug Power (NASDAQ:PLUG) wiggled its way into the day's top performers for a third time in a week, up 39%, after announcing that it had been chosen by logistics giant FedEx (NYSE:FDX) to develop fuel cell range extenders for its electric delivery trucks. The order will cover 20 FedEx delivery trucks and will nearly double their drivable range to 160 miles. As my Foolish colleague Travis Hoium points out, the overall order will total $3 million and is being funded by the U.S. Department of Energy. While Plug Power did meet its fourth-quarter order forecast and it also tacked on another major client in FedEx, it's going to take a significant reduction in losses before I'd even remotely consider Plug Power a viable investment opportunity.