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T3's Take 3: NDX Hits Record Highs on Apple, Biotech Surge


Today's financial recap and tomorrow's financial outlook.


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Health Care Deal Explosion

The health care sector was a driving force behind the charge higher during trading on Monday with the Select Health Care ETF (XLV) up 2.1%.

Biotechnology did even better, with the NASDAQ Biotechnology Index ETF (IBB) up 3.9%.

The rally was driven by yet another round of deal news and activity.

Bloomberg reported that industry giant Pfizer (PFE) and Allergan (AGN) are advancing in their deal talks and could announce a $300+ billion merger as early as December.

Shire (SHPP) has potentially reached a deal to acquire Dyax (DYAX) for $6.5 billion.

Bristol Myers (BMY) is buying Cardioxyl Pharma for up to $1.775 billion.

And Amsurg (AMSG) raised its bid for TeamHealth (TMH) to $7.6 billion after the previous offer was rejected.

Some traders are concerned that the surge in pharma and biotechnology deals could be indicative of a top, but at least for today, the momentum remains in place.

All-Time High Watch

This afternoon, the NASDAQ 100 Index (NDX) and the corresponding QQQ ETF hit new all-time highs, surpassing their previous peaks from July.

The NDX benefited from continued strength in index leader Apple (AAPL), as well as positive action in big cap tech names like Google (GOOGL)  and Facebook (FB).

The aforementioned surge in biotechnology also helped quite a bit, with big NASDAQ names like Gilead (GILD), Amgen (AMGN), and Celgene (CELG) delivering strong gains.

The S&P 500, NASDAQ Composite, and Dow Jones Industrial Average are within striking distance of their own respective all-time highs, but relative to NDX, they have lower exposure to Apple and other strong large-cap technology and biotechnology stocks.

The small-cap Russell 2000 remains a laggard and is about 10% below its high.

Economic Data Improves

Most of last week's economic data was disappointing, but we saw an improvement today.

The October Market US Manufacturing PMI was 54.1, beating the 54.0 consensus.

The ISM Manufacturing Index was 50.1 in October, coming in ahead of the expected 50.0 reading

And September Construction Spending rose 0.6%, edging out Wall Street's prediction of a 0.5% gain.

None of these numbers were outstanding, but they did a represent a rare day when things pointed in the direction of improvement.

Tuesday's Financial Outlook

ISM New York, Factory Orders, and auto sales numbers will be released tomorrow.

Overseas, Australian retail sales, Japan Nikkei PMI, and the China Caixin numbers are on tap.

In earnings, Archer-Daniels Midland (ADM), Mosaic (MOS), and Sprint (S) report before the open.

Ashland (ASH), Cablevision (CVC), CBS (CBS), and US Steel (X) report after the close.

No positions in stocks mentioned.
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