For a second consecutive day, investors were overwhelmed with economic data and earnings, causing much confusion and very little change in the broad-based S&P 500 (SNPINDEX:^GSPC).
Weighing the index down today was the weekly release of jobless claims figures, which pointed to an increase of 14,000 from the prior week to a seasonally adjusted 344,000. While still low relative to the past couple of years, this marks the second week in a row that jobless claims have had a sizable increase, and it could point to slowing improvement in the jobs market.
On the other hand, both the ISM Index for April and personal spending figures from March gave optimists a reason to latch onto this rally.
The ISM Index in April rose to a reading of 54.9 from a reading of 53.7 in March. The good news here is that manufacturing activity appears to be expanding faster than economists' predicted, which would bode well for U.S. GDP.
Similarly, personal spending rose a robust 0.9% in March on the heels of improved weather across the country. This was a sizable jump from the 0.5% personal spending jump witnessed in February. Consumer spending is a critical component of success to U.S. GDP, so investors should be satisfied to see this figure moving higher.
By day's end, the overwhelming amount of data caused the S&P 500 to fall fractionally by 0.27 points (-0.01%) to close at 1,883.68. Despite the drop, three stocks bucked the trend to the upside in a big way.
Topping the charts today was small-cap biopharmaceutical Merrimack Pharmaceuticals (NASDAQ:MACK), which rocketed higher by 59.2% after the company reported that its pancreatic cancer therapy MM-398, in combination with 5-flouoroacil and leucovorin, had met its primary endpoint of improving overall survival in a phase 3 study. The MM-398 combo, which is given to patients following treatment with Gemzar, improved overall survival by 1.9 months to 6.1 months, reduced the risk of death by 33%, and demonstrated a significant advantage in progression-free survival. Merrimack is now planning to file for a new drug application sometime this year. While great news for shareholders, I'd still suggest remaining cautious because trial data is only half the battle when bringing a new drug to market. With unsuccessful launches doing in a number of cancer-focused companies, I'd likely stick to the sidelines until we have a better read on the FDA's views of MM-398 and, if approved, wait until it has a few quarters of sales under its belt.
Helping pack on the pounds of profits today was Weight Watchers International (NASDAQ:WTW), which jumped 19.8% on the heels of a sizable first-quarter earnings beat. For the quarter, Weight Watchers reported a revenue decline of nearly 17%, to $409.4 million, as total paid weeks dipped 14%, and adjusted net income tumbled 64%. Despite the declines, Weight Watchers topped the Street's revenue expectations by $10.2 million, and its adjusted EPS of $0.31 crushed the consensus estimate of $0.09. Furthermore, it beefed up its full-year EPS forecast to a range of $1.45-$1.70 relative to the current consensus of $1.40. Although this news is positive, and shareholders have a reason to be excited today, I'd remind investors that results that are simply not as bad as expected still aren't good. With revenue declining, and customer loyalty practically nonexistent, Weight Watchers is a company I consider to be easily avoidable from an investing perspective.
During its quarter, Pacific Biosciences saw revenue more than double, to $11.6 million from $5.6 million in the year-ago quarter, as it sold nine total PacBio RS II systems compared to three in the prior year, while also recognizing $1.7 million in collaborative diagnostic revenue from Roche. Although its EPS loss of $0.28 was actually $0.01 wider than expected, its revenue topped the consensus of $10.1 million handily. The thought by investors here is that this could be a turning point for PacBio's gene sequencing systems, which have delivered erratic sales for multiple quarters. I certainly find today's results and big increase in PacBio sales encouraging, but would also suggest that profits could be years away. As such, while PacBio holds a unique niche in a growing sector, I'd pass on it until we see a marked decrease in its quarterly losses.
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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