The stock market has become increasingly turbulent lately, and Tuesday continued a trend of one day's gains giving way to the next day's losses. Investors reacted negatively to an unexpectedly strong reading on the inflation front, as a 0.4% rise in the Consumer Price Index for April stoked fears that the Federal Reserve would move forward with planned interest rate increases as soon as its June meeting. Key earnings reports also played a role in pulling the market downward, and major market benchmarks closed the day down 1% to 1.25%. However, a few stocks still rose sharply, and some of the best performers on Tuesday were Pandora Media (NYSE:P), Southwestern Energy (NYSE:SWN), and Valeant Pharmaceuticals (NYSE:BHC).
Pandora closed up 6% after news that one of its major shareholders could push the streaming-music specialist to put itself up for sale. Pandora has been the subject of acquisition-related rumors before, but activist investors at Corvex Management disclosed in the latest quarterly round of required SEC filings of their holdings that it had taken a 10% stake in Pandora and would put pressure on the company to consider strategic alternatives. Skeptical investors have believed for a while that Pandora's best exit strategy was to find a buyer in the tech or mobile space, but the relatively small upward movement in the stock reflects the fact that Pandora hasn't been enthusiastic about seeking a merger partner. Nevertheless, if Corvex starts taking a more active role, that might be the catalyst that overcomes past obstacles.
Southwestern Energy climbed 7% in the wake of a positive day in the energy markets. Oil rose about 1.5% to climb toward $48.50 per barrel, and natural gas prices were also up by roughly 1.5% on the front-month futures contract. Many analysts remain bearish on the longer-term prospects for natural gas, even though a recent report from rival Cabot Oil & Gas suggests that the important Marcellus shale formation might finally have reached peak production. Although lower production could hurt Southwestern's revenue, it could also put upward pressure on natural gas prices over the long run, and that might be enough to offset production declines to produce higher profits. Southwestern has traditionally had attractive cost figures compared to other production companies, and it will be in a good position if prices recover.
Finally, Valeant Pharmaceuticals picked up 8%. A couple of factors seemed to have a favorable effect on the pharma company. First, Valeant continued to gain ground after saying yesterday that it is planning to offer discounts on two of its key heart drugs, Isuprel and Nitropress. Second, Andrew Left of the much-followed Citron Research said he had bought stock in Valeant along with a hedging options position to protect from downside risk. Left doesn't believe the stock will explode higher in the near future, but he does see potential after having covered his short position back in March. Overall, investors might prefer to adopt a wait-and-see approach before committing too much to a Valeant turnaround.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Pandora Media and Valeant Pharmaceuticals. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.