Wednesday Wrap-up: Mexico Trade, Strong Growth, Pharma Sector Top Performer

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Stocks are broadly up for the day, a performance in keeping with the week’s narrative: major indexes are consistently bumping up against all-time records as bullish news continues to pour in. Earlier in the week, news broke that the US and Mexico had reached a breakthrough in their talks on the revision of the North American Free Trade Agreement (NAFTA). While the details of the ultimate agreement have yet to emerge, investors bought heavily on the news, which is expected to accelerate a potential deal with Canada. Investors appear to be shrugging off a barrage of negative legal news for the Trump Administration and focusing on continued strength in the technology sector, renewed hope for a Brexit-EU deal, and a Q2 growth revision up to 4.2%.

The coming weeks promise to be quite fascinating as more and more investors return from summer vacations (despite the impressive rally, this August kept with the tradition of comparatively muted volume). The barrage of positive macroeconomic news has stocks flying high but analysts whispering “meltup.” Growth is expected to recede from the Q2 high-water market (bolstered by a huge wave of tax cuts) and while earnings growth is strong, exceptional earnings growth is baked into many stock prices at this point in time. September, meanwhile, is traditionally one of the rougher months for equity markets, and substantial risks remain. Nevertheless, economic fundamentals remain strong, and volatility is the only thing that appears certain in the coming months.

Affimed (NASDAQ:AFMD): Pharma Stock Surges on Deal with Genentech

 

Clinical stage pharma firm Affimed’s stock surged this week after announcing a major deal with Genentech to “to develop and commercialize novel NK cell engager-based immunotherapeutics to treat multiple cancers.” The deal, announced after the close of Monday’s trading,  will provide AFMD with $96 million in upfront funding. Affimed is eligible to secure an additional $5.0 billion, including milestone payments and royalties.

The firm focuses on targeted immunotherapies, attempting to cure patients using techniques based on both innate and adaptive immunity (NK and T cells). They are working to develop single and combination therapies to treat cancers and other life-threatening diseases.

Investors have been piling into the stock since the announcement. AFMD is sitting up 290% at the time of this writing. And those gains actually represent a pullback from highs that reached 359% earlier in today’s trading. The gains are a welcome respite for AFMD, which has fallen from highs over $10.00 achieved as recently as Fall, 2015.

Such dramatic gains are not so uncommon in the wildly volatile pharmaceutical industry. Even expert finance professionals don’t know ahead of time which treatments hold the most promise. Single announcements—whether from the FDA or a major industry player like Genentech—can dramatically alter the value of clinical stage firms overnight. News-based trading provides a natural avenue for taking advantage of this wildly profitable momentum without long-term exposure to the substantial buy-and-hold risk of clinical stage pharma development firms.

If you’d like to learn more about using the news to find market-beating stock profits, we recommend one of our free virtual training seminars. We don’t put on a hard sell; we’ll just take a look at how our platform synthesizes deep historical data and real-time news analytics to help smaller investors get in on the data-driven profits hedge funds have been vacuuming up for decades. You can claim a spot in our next session using the button below.