Major indexes initially plunged early Tuesday after North Korea fired a ballistic missile over the Tohoku region of Japan, but recovered as the day wore on. All told, the Dow Jones Industrial Average (DJINDICES: ^DJI) gained 57 points, while the S&P edged just into positive territory.
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Oil stocks endured a similarly volatile session; the SPDR S&P Oil & Gas Exploration and Production ETF (NYSEMKT: XOP) initially dropped as much as 1.9% before recovering to close down 0.1%. Retail stocks also extended Monday's declines, with the SPDR S&P Retail ETF (NYSEMKT: XRT) falling 0.6%.
As for individual stocks, positive earnings news curiously sent shares of Best Buy (NYSE: BBY) tumbling, and a hiccup with the approval of a new Parkinson's treatment from Acorda Therapeutics (NASDAQ: ACOR) left investors in the biotech specialist reeling.
Best Buy's not-so-bad earnings
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Shares of Best Buy fell 11.5% today despite the electronics retailer posting strong fiscal second-quarter 2018 results. Quarterly revenue climbed 4.8% year over year to $8.94 billion, including 5.4% comparable-sales growth. On the bottom line, that translated to 21.1% growth in adjusted earnings per share to $0.69. Analysts on average, were only expecting adjusted earnings of $0.63 per share on revenue of $8.66 billion.
As such, Best Buy raised its full fiscal-year outlook to call for revenue growth of roughly 4%, up from its previous expectation for an increase of 2.5%. Best Buy also increased its guidance for full-year adjusted operating income growth of 4% to 9%, compared to prior guidance for operating income growth of 3.5% to 8.5%.
Best Buy CEO Hubert Joly credited the company's impressive comparable sales to solid demand for technology products, and "the strong execution of [Best Buy's] strategy."
So why, then, did Best Buy decline today? During the subsequent conference call, Joly noted that "[W]e do not believe that mid-single-digit comps are a new normal," and warned that competition in the consumer electronics space will likely ramp in the second half of the year.
To be fair, Best Buy stock is still up more than 40% over the past year, even after today's decline. But there was little not to like about Best Buy's quarter apart from Joly's words of caution. So while some investors are seizing the chance to take profits off the table, I think long-term shareholders should still be pleased with Best Buy's position.
Acorda's FDA rejection
Shares of Acorda Therapeutics plummeted 24.3% today, after the company revealed it received a "Refusal to File" (RTF) letter from the U.S. Food and Drug Administration regarding a new drug application for its INBRIJA Parkinson's treatment.
The FDA determined that Acorda's application "was not sufficiently complete to permit a substantive review" for two reasons: First, the date when its manufacturing site would be ready for inspection. And second, a question over the submission of the drug master production record. The FDA also asked for "additional information at resubmission which was not part of the basis for the RTF."
As it stands, Acorda is seeking to meet with the FDA to respond to its concerns and clarify which additional information is required. Importantly, Acorda also noted that the FDA did not request additional clinical efficacy or safety studies for INBRIJA.
"We remain confident in INBRIJA's data package and its promise as an important new therapy for people with Parkinson's disease," added Acorda CEO Ron Cohen, M.D. "We see tremendous long-term value in its solid clinical profile, significant commercial opportunity and strong IP, and remain focused on working to bring patients this important new therapy."
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