Heading into the weekend, investors had no large-scale economic data to rely on, and focused instead on persistent tensions between Russia and the rest of the world about its annexation of Crimea from Ukraine.
As a result of Russia's aggression to claim Crimea, the U.S. and EU have both imposed sanctions on Russia. These have the potential to slow down growth in an otherwise rapidly growing country. Were Russia to retaliate with sanctions of its own, it's quite possible that global growth prospects could tick down a bit, which wouldn't bode favorably for stocks.
Also, I believe the mixed reality of a QE3 taper is beginning to hit home with investors following Fed chairperson Janet Yellen's commentary earlier this week. The U.S. economy is doing better, as evidenced by the additional $10 billion taper down to $55 billion in economic stimulus each month. But the taper also signals the end of free money and a possible shift in lending rates, which the Fed may look to raise as early as next year. When rates begin to rise, it's quite possible that industries that are very reliant on low lending rates, such as homebuilders, could be hurting big time.
Despite hitting a fresh all-time intraday high, the broad-based S&P 500 dipped by 5.49 points (-0.29%) to close at 1,866.52, but still ended the week more than 1% higher than where it began.
The highlight of the day, though, went to biopharmaceutical company Endocyte (NASDAQ:ECYT), which skyrocketed 92.4% after announcing a duo of positive news. First. it announced that its phase 2b results for its TARGET trial evaluating the combination of vintafolide and docetaxel in treating non-small cell lung cancer (NSCLC) patients met its primary endpoint, and lowered the risk of disease worsening or death by 25% compared to the docetaxel arm by itself. Also, Endocyte received a positive opinion from the Committee for Medicinal Products for Human Use in the EU on Vynfinti (the EU name for vintafolide), and its companion diagnostics Folcepri and Neocepri for conditional marketing authorizations. These three positive opinions will now be reviewed by the European Commission. In addition to representing a solid win for Endocyte, it's a big positive for Merck (NYSE:MRK), which is Endocyte's licensing and marketing partner outside the United States.
Not to be outdone, small-cap intellectual property and licensing company Unwired Planet (NASDAQ:GECXU) soared 49.2% after announcing that it had sold a portfolio of patents to China's Lenovo for $100 million in cash, as well as agreed to a term-based license of Unwired's patent portfolio with Lenovo. The portfolio includes patents that relate to 3G and LTE mobile technologies, as well as other mobile patents, and should help Lenovo build on its push into mobile following its recent acquisition of Motorola Mobility from Google. For Unwired, it now gives the company fresh capital that can be deployed to buy or develop new technology patents.
Finally, multimedia company LIN Media (UNKNOWN:LIN.DL) soared 22.5% after it and Media General (NYSE:MEG) announced that they would be merging in a $2.6 billion deal to create the second-largest pure-play television broadcasting company. Under the terms of the deal, LIN shareholders can choose to receive either $27.82 per share in cash, or 1.5762 shares of the new holding company for each share of LIN that they own. The transaction will help the combined company reach 23% of all U.S. TV households with the expectation that cost synergies could reach $70 million annually after the third year post-merger. This looks like a smart move for these two companies, with media giants in general merging en masse of late. I still urge caution because the valuation of the combined entity may be a bit rich at the moment, but the deal should be a winner in the long run.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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