October 7, 2013 - October 11, 2013
The week started off lackluster due to the continuing woes of Washington’s budget standoff. However, everything changed when House speaker John Boehner said Republicans would be willing to temporarily increase the debt ceiling in exchange for discussions with President Obama about other budget and deficit issues.
Republicans don’t seem to be insisting upon removing Obamacare funding during these discussions, which was one of the major sticking points that caused the shutdown to begin with. However, President Obama maintains his stance that he will only negotiate after the debt limit is increased and the shutdown ends.
The Dow Jones Industrial Average and the S&P 500 both rallied over 2% on the news. The CBOE Volatility Index(VIX), a measure of fear in the market, also dropped substantially.
More good news for the market, President Obama nominated Federal Reserve Vice Chair Janet Yellen to replace Ben Bernanke as the head of the central bank. Yellen is widely regarded as dovish in her thought, that is, she supports the easy money policy of the Fed. There wasn’t much market reaction to the news because it was already widely expected.
Jobless claims had a huge spike, coming in at 374,000, however, most of the increase is due to computer problems in California, so the numbers aren’t very reliable this time. Also due out this week was the Producer Price Index and the Retail Sales report, however, both delayed due to the government shut down.
Now let’s review some individual stocks.
Ariad Pharmaceuticals Inc. (NASDAQ: ARIA) put on hold clinical trials for their drug, Iclusig. According to sources, Iclusig caused more bloods clots and more heart-related issues than previously reported. Iclusig is a last resort treatment for two rare types of leukemia, and the company was hoping to expand usage. Shares plummeted over 70% during trading this week.
Huntington Bancshares Inc (NASDAQ: HBAN) and Camco Financial Corp. announced Huntington will acquire Camco, effectively expanding both banks. Shares for both spiked; Huntington jumped 3% while Camco jumped over 49%.
Vonage (NYSE: VG) acquired Vocalocity Inc. with a deal valued at approximately $130 million. Vocalocity specializes in cloud-based communication services to small and medium size businesses, and opens a new high-growth market line to Vonage.