We’ll have to put this week in the loss column. While the Dow Jones Industrial Average was virtually flat, the S&P 500 retreated 15 points or 0.7% and the NASDAQ fell by 1.3%. While technology stocks fell only a bit, the NASDAQ was hit hard by selling in biotechnology shares. In all, healthcare was negative by 2.6%, as drug pricing became the headline de jure. Notably, weak results and guidance by drug distributor McKesson Corp. sent the shares falling a whopping 23% on Friday, taking with it generally steady rivals Cardinal Health and AmerisourceBergen by 9.8% and 13%, respectively. The rout spilled over to pharmacy benefit managers Express Scripts and conservative choice CVS Health as well, both hitting 52-week lows. Political pressure with a win next week by Hillary Clinton took down the entire pharmaceutical sector. Other than utility stocks, which managed a nearly 1% gain, other sectors were either flat or in the red.
A pickup in mergers and acquisitions helped derail a steeper decline in stocks as Qualcomm, General Electric, Rockwell Collins and TD Ameritrade were all in shopping mode as low borrowing costs remain for awhile. A rise in GDP in the third quarter rose at an annual rate of 2.9% compared with the second quarter’s pace of 1.4%. The better-than-expected report on GDP will further cement the Fed raising interest rates in December. Meanwhile . . .
. . . earnings continue to roll in for the third quarter. This week Gilead Sciences will report earnings estimated at $2.85 per share vs. $3.22 and LyondellBasell with consensus of $2.32 compared to last year’s $2.80. The Federal Reserve meets on Wednesday, but unlikely to pull the trigger on rates before the election. Also, October jobs will be reported on Friday with an estimated gain of 175,000 new positions added. The markets will probably stay in a trading range until next week’s election and then there will most likely be major sector rotation for the remainder of the year with healthcare, utilities, REITs and other income plays giving up ground to industrials and financial stocks. In the meantime, enjoy the rest of the World Series.
Here is the answer to last week’s trivia question: As thebuttonwoodproject enters its seventh year, I have posted 1,492 times. How many views from readers have been made of these postings over the past six years? 2,981, 5,440, 8,002 or 13,624. Answer: 13,624.
Today’s Trivia Question: In August, Tesla Motors reached a deal to buy what company? Tata Motors, SolarCity, TRW Automotive or Energizer Holdings.