A Week Of Choppy Markets And Rising Rates
Summary
- Markets saw some choppiness throughout the week as the Ten Year Treasury yield rose to its highest levels since January of last year.
- Damage was contained, however. For the week, all the major indices managed to post less than a one percent weekly loss.
- A full recap of the week's market action, significant insider buying and some notable biotech events follows below.
Imagine a political system so radical as to promise to move more of the poorest 20% of the population into the richest 20% than remain in the poorest bracket within the decade? You don’t need to imagine it. It’s called the United States of America.”– Thomas Sowell
The trading week got off on the right foot as all the major indices ended the day in the black led by a gain of just over one percent by the NASDAQ. Both the S&P 500 and the Dow were up a bit over a half percent on the day. The February Empire State Manufacturing Index posted a better reading than expected on Monday. Investors appear content to ignore that the new administration is looking at raising corporate and capital gains tax rates to pay for a massive infrastructure package after just ramming through a $1.9 trillion Covid19 relief package, that had very little money allocated to measures to actually combat the virus.
A big winner in Biotech Land that day was Rubius Therapeutics (OTCPK:RUBY) which was up almost 85% on the day. The company reported positive trial results in treating solid tumors, got a big analyst 'shout out' and then, of course, announced a major new capital raise after the closing bell.
The markets ended mixed on Tuesday, the NASDAQ managed a gain of a half of a percent but all the other major indices ended in the red slightly except for the small cap Russell 2000 which was off one and two thirds percent on the day. The yield on the 10-Year Treasury bill went up to 1.65% and continues to be one of the watched indicators for investors at the moment. A survey from BAML had 43% of money managers believing the market would have at least a 10% correction if this yield hit the 2% mark.
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Stocks had a solid day on Wednesday, as the Federal Reserve upped their growth projections for 2021, but stated they didn't see any interest rate hikes until 2024. All the major averages posted slight gains for the day, even as the NASDAQ was down about one percent before some Fed speak comforted investors. February Housing Starts and Building Permits surprised to the downside. This is probably due to a combination of rising mortgage rates and some hard winter conditions in a good part of the country during parts of February. The average 30 - Year mortgage rate has been creeping up in recent weeks but still remains near historical lows.
Rising interest rates certainly got the better of investors on Thursday as the 10-Year moved through the 1.7% barrier. The NASDAQ was off some three percent while the S&P 500 lost half that amount. France also instituted a new set of lock downs due to a new surge of Covid19 cases as Europe continues to struggle containing the pandemic. One would think by now, politicians would realize lock downs simply don’t work after several previous ones did not snuff out the coronavirus, but evidently not.
On Friday, the NASDAQ was up .8% while the Dow fell about the same amount while the S&P 500 was off just slightly. For the week, all three major indices were down less than one percent despite some choppiness in the market as the 10-Year Treasury yield now stands at its highest level since January 2020, before the pandemic swept over the country.
Financials were weak on Friday, which was a quadruple witching day, as The Fed said Friday that it would allow a yearlong reprieve for the way big banks account for ultrasafe assets such as Treasurys to expire at the end of the month. This pressured bank stocks on the day.
The first high-level talks between the Biden administration and Chinese officials are took place in Alaska and were described as contentious.
Insider Buying Focus:
Outside of new IPOs, SPACS and a few names insiders seem to have bought consistently for years, there has been very few notable insider buys in the market recently. Here are couple I think worth mentioning this week that might be worthy of further research.
GoHealth (GOCO) saw some notable insider buying on the week. The company is a leading health insurance marketplace and Medicare-focused digital health company based out of Chicago. Two directors and the CEO bought over $4.1 million worth of new shares from March 12th and March 16th. It was the first insider buying in the stock since the company came public last summer. We will be putting out an exclusive deep dive on this company to Insiders Forum members sometime during this weekend.
Rupert Murdoch has been very active buying News Corp. (NWS) here in March. So far he has added just over $50 million worth of new shares. It is the first insider purchases in this name since the summer of 2018.
Finally, two directors and the CFO of Savara (SVRA) bought just over $1.1 million worth of stock on March 15th. The CEO added $50,000 to his stake in the company on February 22nd. It is the first insider activity in this name since late spring of 2019. Oppenheimer initiated the shares as a new Outperform with a $4.00 price target this week as well.
Biotech Week In Review:
Biotech rose over three percent in trading Friday but was still down just under one percent on the week, in line with the overall market this week. Idera Pharmaceuticals (IDRA) was one of big losers on the week as the shares fell over 60% on Friday. The company announced after the bell on Thursday that its Phase 3 ILLUMINATE-301 trial of tilsotolimod in combination with ipilimumab versus ipilimumab alone in patients with anti-PD-1 refractory advanced melanoma, did not meet its primary endpoint.
On Thursday, the shares Translate Bio (TBIO) fell just over 30% after it was disclosed that a second interim analysis from its Phase 1/2 mRNA trial of MRT5005 in patients with cystic fibrosis [CF] exhibited no evidence of increases in lung function as measured by ppFEV1.
And that was the week that was.
Much of the social history of the Western world over the past three decades has involved replacing what worked with what sounded good.”– Thomas Sowell
Thank You & Happy Hunting,
Bret Jensen
Founder, The Biotech Forum, The Busted IPO Forum & The Insiders Forum
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