Bad news from Swiss pharmaceutical giant Novartis was weighing on the Dow on Tuesday.
Investors returning from the Labor Day break could be forgiven for wondering if their eyes were deceiving them, but yes, futures on the Dow Jones Industrial Average were significantly worse than the S&P 500.
Shortly after the European stock market opened, the Dow contract (YM00) was down 506 points, or 0.95%, vs. just a 0.4% retreat for the S&P 500 (ES00).
The gap is explained by the price-weighted nature of the Dow DJIA and one company in particular: Amgen.
Amgen shares $(AMGN)$ fell sharply, down some $22 or 5% in early premarket action. So that's some 120 Dow points right there, since Amgen has the fourth-highest stock price in the index. The biopharmaceutical company by contrast is the 49th largest S&P 500 stock, so a one-day fluctuation is barely perceptible.
The Amgen decline was due to a rival company's setback. Novartis $(NVS)$ said on Friday night that a late-stage trial of its experimental cardiovascular drug pelacarsen did not meet its primary endpoint.
Analysts at Citi called the news "surprising" and said it's bad for other companies trying to tackle what's called Lipoprotein(a). Lp(a) is a type of cholesterol that increases the risk of heart disease and stroke and isn't helped by statin drugs. A smaller company called NewAmsterdam Pharma $(NAMS)$ dropped about 10% in premarket trading on Tuesday.
As for Novartis (CH:NOVN), its stock fell 3% on Monday in Swiss trade and then tumbled another 10% on Tuesday after revealing even more bad news. It said that a late-stage trial of del-desiran for people living with a muscular disease called myotonic dystrophy type 1 also didn't meet its primary endpoint.
-Steve Goldstein