Closing Stock Market SummaryThe Dow Jones Industrial Average (+1.4%) and Russell 2000 (+4.0%) closed at record highs on Wednesday, as small-caps and cyclical stocks exhibited strength on the prospect of a Democrat-controlled Senate. The market, however, closed off session highs, as risk sentiment waned after pro-Trump protesters breached Capitol Hill.
The S&P 500 finished with a 0.6% gain after being up 1.5% intraday, while the Nasdaq Composite declined 0.6% amid weakness in the mega-caps.
Briefly, investors were pricing in expectations for more fiscal stimulus after Democrats flipped at least one Senate seat in Georgia following yesterday's runoff elections, according to media projections. The second race remained too close to call as of 4:00 p.m. ET but favored the Democrats, who would need this seat to control the Senate by the slimmest of margins.
Accordingly, the cyclical financials (+4.4%), materials (+4.1%), energy (+3.0%), and industrials (+2.4%) sectors finished atop the standings with strong gains. The possibility of increased tech scrutiny, however, reined in the influential information technology (-1.8%) and communication services (-0.7%) sectors.
Investors were buying the dip in technology stocks after the open, but the rebound effort was squandered after the protesters breached Capitol Hill shortly after 2:00 p.m. ET during the certification of the electoral college results. The technology sector had briefly returned to its flat line before this.
Despite the scene on Capitol Hill, gold prices ($1909.00/ozt, -2.4%) remained suppressed and there was no inclination to buy the dip in Treasuries, which were selling off on expectations for further economic stimulus. The 10-yr yield rose nine basis points to 1.04%, while the 2-yr yield increased two basis points to 0.14%. The U.S. Dollar Index was little changed at 89.40.
Tesla (TSLA 755.98, +20.87, +2.8%) was among the few mega-caps that faired extremely well today after Morgan Stanley raised its price target on the stock to a Street-high of $810. Shares of Apple (AAPL 126.60, -4.41, -3.4%), Microsoft (MSFT 212.25, -5.65, -2.6%), Amazon (AMZN 3138.38, -80.13, -2.5%), and Facebook (FB 263.34, -7.63, -2.8%) fell between 2.5-3.4%.
Separately, Walgreens Boots Alliance (WBA 43.03, +1.87, +4.5%) agreed to sell most of its Alliance Healthcare business to AmerisourceBergen (ABC 106.17, +8.41, +8.6%) for approximately $6.5 billion in cash and stock.
Reviewing Wednesday's economic data:
- Factory orders for manufactured goods increased 1.0% in November (Briefing.com consensus 0.6%) after increasing a revised 1.3% (from 1.0%) in October. This is the seventh consecutive monthly increase in factory orders.
- The key takeaway from the report is that it showed another increase in business spending, as nondefense capital goods excluding aircraft increased 0.5% in November after rising a revised 2.6% in October.
- The ADP Employment Change report for December estimated private-sector payrolls decreased by 123,000 (consensus +120,000). The November reading was revised lower to 304,000 from 307,000.
- The December IHS Markit Services PMI decreased to 54.8 from 55.3 in November.
- The weekly MBA Mortgage Applications Index increased 1.7% following a 0.8% increase in the prior week.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for December, the weekly Initial and Continuing Claims report, and the Trade Balance for November on Thursday.
- Russell 2000 +4.2% YTD
- Dow Jones Industrial Average +0.7% YTD
- S&P 500 -0.2% YTD
- Nasdaq Composite -1.1% YTD
Crispr Gene-Editing Treatment Could Point Way to Fix for Deadly Aging Disease
Experimental technique corrected faulty DNA in mice with progeria gene—but what about humans?
Scientists using a version of Crispr gene editing succeeded in significantly extending the lives of mice with progeria, a rare rapid-aging disease that in children typically leads to death in their teens.
The pathbreaking achievement, described in a paper published on Wednesday in Nature, suggests that it may be possible to develop effective treatments not only for progeria but also for thousands of other genetic maladies for which effective therapies have proven elusive.
“The extension of lifespan in the mice is a stark and compelling result that underscores the potential for these types of technologies to be transformative,” said Charles Gersbach, director of the Duke University Center for Advanced Genomic Technologies, who wasn’t involved in the progeria study.
The experimental technique, known as base editing, involves changing or editing a single base pair of letters that form the rungs of the ladderlike DNA molecules that make up human and animal genomes. Crispr was first used for gene editing in 2012, and base editing was developed in 2016.
The base editor in the progeria study used a modified Crispr protein to target the mutant gene. But unlike other gene-editing techniques, base editing changes DNA without breaking the double helix. Breaking DNA can lead to unwanted changes.
There are four base units, each known by the first letter of its chemical name: A, C, T and G. Most cases of progeria result from a change of a single letter in the LMNA gene, which helps maintain normal function and structure of a cell’s nucleus.
For the new research, scientists affiliated with the Broad Institute of MIT and Harvard, the National Institutes of Health, and Vanderbilt University gave mice with progeria a single injection of a base editor programmed to correct the disease-causing mutation. These animals lived about two-and-½ times longer than mice with progeria that weren’t given the treatment. The edited mice, which got the injection three or 14 days after birth, lived for nearly 1.5 years—roughly the start of old age in healthy mice.
Liver tumors were detected in some of the longest-lived mice. But testing showed that the tumors were likely caused not by the base editor but by the modified virus used to encapsulate it, so that it could be injected into the mice.
Despite the base-editing advance, steep challenges remain in figuring out how to transform such advances into drugs. Financial and regulatory obstacles to drug development for rare diseases like progeria are especially daunting.
There are an estimated 400 cases of progeria world-wide, including 19 known cases in the U.S. Children with progeria have health issues that are associated with old age, such as hair loss, heart disease and hardened skin. They typically die from heart failure or heart attack by age 15.
“How do you incentivize a company or drug developer to do the work and spend all the money where any one drug may treat one person or 10 people or 100 people?” Duke’s Dr. Gersbach said.
Christopher P. Austin, director of the NIH’s National Center for Advancing Translational Sciences, which is spearheading a new initiative aimed at lowering the cost of gene-therapy clinical trials, said, “For many diseases, the numbers of people are so small there will never be a viable commercial market.”
The new research comes less than a year after the Food and Drug Administration approved the first drug to treat progeria—lonafarnib, or Zokinvy, made by Eiger BioPharmaceuticals EIGR -1.83% of Palo Alto, Calif.
Research on lonafarnib showed that patients with progeria who took the drug lived an average of 2.5 years longer than untreated patients. But gene-editing technologies such as base editing offer the hope of a cure, by fixing the root cause of progeria with a one-time treatment.
David R. Liu, whose lab at the Broad Institute developed the base editors in 2016 and 2017, started working with researchers at Vanderbilt interested in using the editors to correct the mutation in cells from children with progeria. “The early results looked good,” said Dr. Liu, an author of the paper. They then injected the base editor in a single mouse with progeria and were able to correct the mutation in the animal’s heart and liver.
During a 2018 visit to the NIH, Dr. Liu met with the agency’s director, Francis Collins. He shared the cell and mouse data with Dr. Collins, whose lab helped discover the progeria mutation in 2003 and who is an author of the Nature paper.
The labs joined forces to edit larger numbers of mice.
Dr. Collins introduced Dr. Liu to Leslie B. Gordon, medical director of the Progeria Research Foundation, set up in 1999 after Dr. Gordon’s son, Sam Berns, was diagnosed with progeria. (Sam died in 2014 at age 17.) The foundation maintains a patient registry, research program, and cell and tissue bank, among other efforts.
If the progeria base editor was ever going to be made into an approved drug, “the patient organization matters a lot,” Dr. Collins said.
The foundation helped fund the study and provided cells from patients, with Dr. Gordon, who also is a study author, sharing her expertise. Even as the researchers devised experiments, she kept in mind her ultimate goal—to one day bring the experimental treatment to clinical trials in people, she said.
“My role is to show a potential partner that clinical trials and approval can come to fruition,” said Dr. Gordon.
Over the past year, Dr. Gordon and the scientists involved in the base-editing research met regularly with representatives of Beam Therapeutics of Cambridge, Mass., a company co-founded by Dr. Liu that develops base editors for genetic diseases. Although progeria isn’t officially listed as one of the diseases Beam intends to treat, a company spokesman said it is “actively working” with the foundation and the researchers “to explore options for moving base-editing technology forward for children living with progeria.”
Dr. Gordon said progeria offers the chance to demonstrate that base editors work in humans, not just animals, a success that will open a commercial path for other diseases. “There is intense passion by everyone to save the children’s lives,” Dr. Gordon said. “But this isn’t just about a good deed. There is a business case here too.”
Apple announces record App Store holiday spending, $540 million on New Year’s Day aloneApple has announced today that App Store customers spent a record amount throughout the holiday season. Apple says that in total, the App Store has generated more than $200 billion for developers since the App Store launch in 2008.
Apple says that App Store customers spent $1.8 billion on digital goods and services over the week between Christmas Eve and New Year’s Eve. On New Year’s Day, Apple says that customers spent a record of $540 million in the App Store.
“Now more than ever before, customers around the world have found inspiration and value in the breadth and quality of Apple’s services, which have impacted their lives in big and small ways every day,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services. “We’re incredibly optimistic about where we’re headed, and we believe that the opportunities for developers and the creative community are endless, as are the positive and meaningful benefits to our customers.”
Gapping down
In reaction to earnings/guidance:
- GBX -5.1%, SGH -3.3%, MSM -0.6%
M&A news:
- HSIC -1.1% (acquires majority ownership position in Prism Medical Products)
Other news:
- IMRA -24.1% (reported results from its Phase 2a clinical trial of IMR-687 in adult patients with sickle cell disease)
- TMDI -17.6% (announces "bought deal" offering at $1.55 per unit)
- CLSD -10% (prices 4,209,050 shares of common stock at $2.851/share)
- OCN -8.5% (comments on conclusion of mediation with the Consumer Financial Protection Bureau; "settlement discussions with the CFPB did not resolve this matter")
- NEO -6% (stock offering and convertible notes offering)
- ARE -4.2% (prices offering of 6 mln shares of common stock at $164.00 per share)
- NGM -3% (prices offering of 4,629,630 shares of its common stock at $27.00 per share)
- NKTR -1.5% (Chief Medical Officer to step down)
- PLAN -1.5% (names Bill Schuh as Chief Revenue Officer)
- QQQ -1.4% (in-line with Nasdaq futures in pre-mkt)
- PZZA -1.3% (Starboard elected to again exercise the Continuation Option under the Governance Agreement thereby continuing the Standstill Period)
Analyst comments:
- MYOV -3.2% (downgraded to Neutral from Buy at Goldman)
- BYND -2.6% (downgraded to Neutral from Overweight at Piper Sandler)
- FOUR -2.3% (downgraded to Underperform from Neutral at BofA Securities)
- CURI -2% (downgraded to Neutral from Buy at B. Riley Securities)
- KDP -1.8% (downgraded to In-line from Outperform at Evercore ISI)
- PCG -1.3% (downgraded to Underweight from Equal Weight at Wells Fargo)
- PEP -1.2% (downgraded to In-line from Outperform at Evercore ISI)
- ORA -1.1% (downgraded to Neutral from Overweight at JP Morgan)
- RRC -1.1% (downgraded to Neutral from Buy at BofA Securities)
- FE -1% (downgraded to Underweight from Equal Weight at Wells Fargo)
- BAX -0.9% (downgraded to Neutral from Buy at UBS)