T3’s Take 3: Biotech Booms Amid Epic Snoozefest!
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1) Biotech Booms!
It was an altogether lackluster day for the major averages, but biotech put in a booming performance that had the NASDAQ Biotech Index ETF (IBB) up a whopping 2.0%.
Traders were pumped up by Pfizer’s (PFE) $14 billion acquisition of cancer drug maker Medivation (MDVN), which could set off even more deal activity.
Reuters had reported that several other players, including Gilead (GILD) and Merck (MRK) considered buying Medivation, so presumably, these suitors will seek other targets now that Pfizer has sealed the deal here.
2) Yawn!
At the open this morning, the S&P 500 dipped and the VIX spiked, which had many market observers (including myself) hoping that we’d finally see some real downside volatility.
It wasn’t to be. The hot action in biotech kept the bears at bay, and the Russell 2000 put in a pretty decent performance as well.
Crude oil took a big hit today as traders are becoming less certain that OPEC will freeze or cut production at the big meeting in December.
The S&P finished down -0.1% at 2183, making today the 31st day without a 1% move in the index.
3) Hawks Fly?
On Sunday, Fed vice-chairman Stanley Fischer said the US economy was closing to hitting full employment and the Fed’s 2% inflation goal.
Right now, traders are pricing in a 51% chance of a December rate hike, so markets are split right down the middle.
We may get some clarity with FOMC Chair Janet Yellen’s speech at Jackson Hole on Friday.
But I’d like to caution traders against making a rush to judgement on what Yellen may say.
Don’t forget that many Fed officials came out hawkish ahead of the June meeting, only to be shocked by a dovish statement.
P.S. Don’t forget to check out Kurt’s FREE forex webinar!
Tuesday’s Trading Calendar
US Economics (Time Zone: EDT)
10:00 New Home Sales (Jul): exp. 580k, prior 592k
10:00 Richmond Fed Manufacturing Index (Aug): prior 10
Global Economics
12:00 JPY BOJ Gov Kuroda Speaks
03:00 EUR French Flash Manufacturing PMI
03:30 EUR German Flash Manufacturing PMI
04:00 EUR Flash Manufacturing PMI
18:45 NZD Trade Balance
21:30 AUD Contruction Work Done q/q
Earnings
Before Open:
Best Buy Co (BBY)
Toll Brothers (TOL)
After Close:
Intuit Inc (INTU)
Lannett Company (LCI)