Will the Dow Hold On?
|Dow Jones Industrial Average (INDEX: ^DJI)||(13.47)||(0.10%)||12,841.57|
Source: Yahoo! Finance.
The Nasdaq looks poised to finish the week on a positive note, while the Dow and S&P 500 are barely clinging on to positive territory toward the end of the trading session after recovering from a rough start. The drop is largely due to the declines seen in the financial sector spurred on by JP Morgan's (NYS: JPM) surprise conference call after the markets closed yesterday.
The Wall Street bank disclosed a $2 billion derivative trading loss and shares have been punished by more than 8%. Other banking component Bank of America is down less than 1%, as a rough derivative loss at a competitor is hardly a systemic issue. But the episode reinforces the belief that even the best-run Wall Street banks struggle with risk management and raise the specter of "too big to fail."
The big action today is in health care, specifically the biotech space, after an FDA advisory committee recommended approval for Arena Pharmaceuticals' (NAS: ARNA) obesity drug lorcaserin by an impressive 18-4 margin. Arena's closest competitor is VIVUS (NAS: VVUS) ; its drug Qnexa received a 20-2 thumbs-up, but the FDA delayed a final decision on Qnexa by three months. The overwhelming vote of confidence is a reversal, since both drugs, along with Orexigen's (NAS: OREX) Contrave, received lukewarm support and rejection letters from the FDA not that long ago. Treating obesity is a huge market (pun intended), so investors have a right to be excited. Arena is up 73.5% on the news, while the warm glow led to VIVUS shares gaining over 8% and Orexigen climbing an even 20%.
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