It was a good week to be a bull. U.S. markets stayed positive through most of the week as investors cheered progress on addressing the debt crisis in Europe and strong economic reports at home. Capping the week, the U.S. Department of Labor announced that 243,000 jobs were added in January, far more than economists were expecting. Rising payrolls helped knock the unemployment rate down to 8.3%.
By the time the dust had settled, the Dow Jones Industrial Average (INDEX: ^DJI) tacked on 1.6%, while the broader Russell 3000 had an even better 2.4% gain. Investors were looking toward economic growth, which meant that they were less excited about defensive sectors.
The 3 Worst-Performing Sectors
Russell 3000 Sector
Weekly Price Change
Month-to-Date Price Change
Source: S&P Capital IQ. Weekly price change is Jan. 27-Feb. 3. Monthly price change is Jan. 31-Feb. 3.
Long-suffering biotech MannKind (NAS: MNKD) led the Russell 3000 losers with a hefty 34% drop for the week. The reason? Dilution. The company went back to the funding well and sold new stock and convertible debt to raise cash to keep the lights on. The company has been plugging away at trying to get its inhaled insulin, Afrezza, approved by the U.S. Food and Drug Administration. To date, it's hit brick walls with the FDA, but the company is stubborn if nothing else and hopes to file a new application for approval in early 2013. Investors along for that ride had better be prepared for further dilution, though, as the company said that the current round of funding will only take it through the third quarter of this year.
MannKind wasn't the only company that watched its shares fizzle after new funding announcements. Shares of oil and gas explorer Hyperdynamics (NYS: HDY) continued their best pinball impression, this time zipping down 29% for the week. The bulk of that loss came as the company admitted that drilling costs for its offshore Republic of Guinea operations hurt its liquidity and led it to raise $30 million through a new stock sale. Making matters worse, energy-focused investment firm Howard Weil slapped Hyperdynamic's stock with a downgrade to market perform following the stock-sale announcement.
The 3 Worst-Performing Russell 3000 Companies
Weekly Price Change
Source: S&P Capital IQ. Weekly price change is Jan. 27-Feb. 3. Includes only companies with market caps of $250 million or more.
Also among the week's worst performers were SandRidge Energy (NYS: SD) and Polypore International (NYS: PPO) . SandRidge frustrated investors when it announced that it's buying Dynamic Offshore resources and coughing up $1.27 billion for the cash-and-stock deal. Investors weren't the only ones concerned about the deal, as investment firms Tudor Pickering and Howard Weil added to the pessimism by downgrading the stock. SandRidge's stock finished the week down 12%.
Polypore, meanwhile, saw its shares go into freefall after former customer LG Chem announced that it's going into Polypore's business and becoming a competitor. That alone would have been bad enough, but once again the analysts piled on here, with DA Davidson downgrading the stock, while both Axiom Securities and Wunderlich initiated the stock with a sell rating. Though the stock finished the week with a 17% loss, the pain relented on Wednesday, when the shares showed they still had some bounce in them.
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