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This morning, investors are reacting to the second revision of the Q4 2014 GDP reading. The U.S. government said it grew a pace of 2.2%, which beat expected growth of 2.1% in fourth quarter. Still, the figure was reduced from the previous reading of 2.6% and the pace is a large decline from the Q3 2014 final reading of 5%.
Later this morning, the markets will keep an eye on the University of Michigan's final February count on consumer sentiment, and a report on pending January home sales. Economists anticipate a consumer sentiment reading of 94, a slight increase from the initial 93.6 reading. Meanwhile, January pending home sales are expected to increase 2% – a solid bump after December's surprise 3.7% decline.
DJIA futures and Friday's fresh economic data are just a part of the story in stock market news today. Here are the other top headlines – plus your "Money Morning Tip of the Day":
- Net Neutrality Ruling: Yesterday, the Federal Communications Commission (FCC) voted in favor of controversial net neutrality regulations today. Under the plan, regulators will prohibit Internet service providers like Comcast Corp. (Nasdaq: CMCSA) and Verizon Communications Inc. (NYSE: VZ) from "discriminating" against a particular online service or website. Opponents have called the plan a "government takeover of the Internet" that will stifle innovation and slow down Internet speeds. Here's our quick guide to the net neutrality debate…
- The Death of Retail: Shares of J.C. Penney Company Inc. (NYSE: JCP) cratered more than 14% in pre-market hours after the company reported a surprise quarterly loss. Sears Holding Corp. (Nasdaq: SHLD) dipped more than 5% Thursday after reporting its fourth straight annual decline of revenue and profits, despite posting a narrower quarterly loss than Wall Street expected. Sears recounted a per-share loss of $0.34, beating consensus expectations of a $1.89 loss.
- Oil Prices Today: Oil prices are on pace for their biggest monthly gain since 2009, despite a sharp dip yesterday. April 2015 futures for U.S. crude, priced at the NYMEX in New York City, jumped nearly 2% to hit $49.15 per barrel. Meanwhile, Brent crude, priced in London, added another 2.3% to hit $61.46 per barrel.
- An Apple a Day: Shares of Apple Inc. (Nasdaq: AAPL) are down marginally in pre-market hours on news that Ericsson sued the tech giants over 41 alleged cases of patent infringement. The specified patents are central to the functionality of Apple devices, including the popular iPhone. The company has also sent invitations to an event on March 9, telling participants to "Spring Forward." The event, which coincides with Daylight Savings Time, is one month before the company has plans to launch the Apple Watch.
- Earnings Week: Shares of Gap Inc. (NYSE: GPS) jumped more than 2% pre-market on news the company will raise its annual dividend and implement a new $1 billion share buyback program. This announcement follows a $500 million program that the company announced in October. The firm's dividend will increase from $0.88 to $0.92. For a breakdown of 25 other stocks that recently boosted their dividends, be sure to read our recent report on the best dividend stocks to own.
- Earnings Reports: Today, expect earnings results from Goodrich Petroleum Corp. (NYSE: GDP), Northwest Natural Gas Co. (NYSE: NWN), Westmoreland Coal Co. (NYSE: WLB), CST Brands Inc. (NYSE: CST), Exelis Inc. (NYSE: XLS), Lloyds Banking Group Plc. (NYSE: LYG), and NRG Energy Inc. (NYSE: NRG).
Full U.S. Economic Calendar Feb. 27, 2015 (NYSE: all times EST)
- GDP at 8:30 a.m.
- Chicago PMI at 9:45 a.m.
- Consumer Sentiment at 10 a.m.
- Pending Home Sales Index at 10 a.m.
- Farm Prices at 3 p.m.
Money Morning Tip of the Day: High-margin specialty drugs, and specifically drugs used to treat hepatitis C, offer one of the best profit opportunities right now in the pharmaceutical market.
High-margin specialty drugs are prescription medications that treat complex, chronic, and debilitating diseases. They're very expensive – as much as hundreds of thousands of dollars.
The market for these medications will quadruple over the next five years. Consumer spending on these drugs hit $87.1 billion in 2012. In five years that number will soar to $401.7 billion.
Some of the priciest high-margin specialty drugs include Soliris, developed by Alexion Pharmaceuticals, and Elaprase, by Shire. Soliris treats a rare blood disorder and costs patients roughly $410,000 per year. Elaprase treats Hunter syndrome and costs $375,000 per year.
Those hefty price tags have caused these drug makers' stocks to surge. Since 2010, Alexion has gained 625%, and Shire 275%.
The biggest profit play of all in high-margin specialty drugs comes from makers of hepatitis C treatments. An April 2014 report from Express Scripts found that spending on hepatitis C drugs is expected to increase by more than 200% in both 2015 and 2016.
Newer and more convenient treatments in the coming years will drive sales. And the high price of these hepatitis C drugs will propel the stocks of the pharmaceutical companies that make them to new heights.
Get the best stock pick to play this trend right now, here: "These Pharmaceutical Stocks Let You Tap into a $402 Billion Trend."
About the Author
Garrett Baldwin is a globally recognized research economist, financial writer, and consultant with degrees from Northwestern, Johns Hopkins, Purdue, and Indiana University. He is a seasoned financial and political risk analyst, with a focus on stocks, hedge funds, private equity, blockchain, and housing policy. He has conducted risk assessment projects for clients in 27 countries, and consulted on policy and financial operations for some of the nation's largest financial institutions, including a $1.5 trillion credit fund, a $43 billion credit and auto loan giant, as well as two of the largest Wall Street banks by assets under management.
Garrett joined Money Map Press as an economist and researcher in 2011, specializing in alternative strategies with an emphasis on fundamental and technical analysis.