The stock market moved higher Thursday morning, spurred by optimism that the U.S. economy will continue to expand even amid global pressures and ongoing worries about trade. Investors are also trying to figure out exactly what the impact will be from yesterday's Fed decision to leave interest rates unchanged. As of 10:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was up 55 points to 25,801. The S&P 500 (SNPINDEX: ^GSPC) rose 11 points to 2,835, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) climbed 46 points to 7,775.
As for individual stocks, two big names moved in opposite directions early in the session. Biogen (NASDAQ: BIIB) was sharply lower on bad news regarding what had been a promising candidate treatment, but Micron Technology (NASDAQ: MU) moved higher following the release of its most recent financial results.
Biogen cuts Alzheimer's treatment trials short
Shares of Biogen plunged 27% after the biotech company said that it and its partner, Eisai, had decided to discontinue two key phase 3 trials of its candidate treatment aducanumab. The trials were evaluating aducanumab's efficacy and safety in treating patients with mild cognitive impairment and dementia due to Alzheimer's disease, and many medical professionals and investors alike were hopeful that the trials would produce encouraging results.
Image source: Biogen.
Unfortunately, that proved not to be the case. Biogen said that an independent data monitoring committee had come to the conclusion that the trials were unlikely to meet their primary endpoints. Although safety wasn't a concern, the findings led the biotech giant to discontinue earlier-stage trials of aducanumab as well.
Biogen CEO Michel Vounatsos tried to stay optimistic about the future. "This disappointing news confirms the complexity of treating Alzheimer's disease," Vounatsos said, but "driven by our steadfast commitment to patients and our strong business foundation, we will continue advancing our pipeline of potential therapies in Alzheimer's disease." Nevertheless, shareholders know that less-developed candidates will take time to play out and could hit the same obstacles that doomed aducanumab to failure.
Micron makes memories
Meanwhile, Micron Technology shares climbed 9% after the memory chip specialist issued its fiscal second-quarter financial report. At first glance, the results weren't pretty, with revenue plunging more than 20% and adjusted net income dropping an even steeper 44% compared to the same period a year ago.
Yet investors had already recognized that Micron was going through a cyclical downturn, which is typical for companies in the industry. Historically, semiconductor chip prices have risen and fallen as Micron and its competitors make decisions about production capacity based on prevailing demand and market conditions. When memory prices are high, Micron ramps up production to take advantage, resulting in an eventual supply glut that sends prices lower. Chipmakers then respond by cutting capacity, which eventually helps memory prices recover.
Unfortunately, things could look ugly for Micron's fundamental business for a while longer. The memory giant sees elevated levels of inventory as a problem that could take time to run off, and it isn't ready to call a bottom for pricing. Despite the decision to idle some of its production plants, the impact on supply will take time to work its way through the market and affect the industry as a whole.
Today's rise for the stock reflects expectations that Micron will eventually emerge from the difficult industry environment stronger than ever. Don't be surprised, though, if it takes longer for Micron's results to look as encouraging.
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