Bargain hunting after last week’s massive selloff sent the major US equity indices sharply higher on Tuesday. While concerns about an eventual recession continued to linger, the Nasdaq and the S&P 500 both recorded gains of around 2.5%.
The electric vehicle space was one of the leaders to the upside. This beaten-down sector received a wave of dip-buying, with names like Tesla (TSLA), Li Auto (LI), Rivian Automotive (RIVN), Lucid Group (LCID) and Nio (NIO) all showing strength.
Valneva (NASDAQ:VALN) represented another standout gainer on the session. The French vaccine maker nearly doubled in value after receiving a major investment from Pfizer (PFE).
Looking at some of the day’s standout decliners, Acadia (ACAD) lost nearly a third of its value after running into a potential stumbling block for an expanded label for one of its drugs. Office Depot owner The ODP Corporation (ODP) also lost ground after its board decided not to move ahead with a plan to break up the company.
Sector In Focus
Tuesday’s rebound in the stock market had an outsized impact on the electric vehicle sector. Investors picked up beaten-down names in the space after the sharp pullback experienced over the past couple of weeks.
Meanwhile, shares benefited from a near-term catalyst involving Li Auto (LI), which jumped nearly 8% after announcing a new SUV model. At the same time, the sector got a boost from higher price targets from Citi.
As part of the rally, industry heavyweight Tesla (TSLA) recorded a remarkable advance. Shares of the Elon Musk-run EV maker soared 9% to close at $711.11. Shares reached a 52-week low of $615.50 in late May.
Elsewhere in the sector, Rivian Automotive (RIVN) climbed 11%, while Lucid Group (LCID) rose almost 8%. Nio (NIO) advanced about 9%.
Valneva (VALN) jumped more than 90% after drug-making powerhouse Pfizer (PFE) took a sizable stake in the French vaccine maker. The move signaled an expansion of the companies’ collaboration on a vaccine against Lyme Disease.
Under the new deal, PFE will purchase an 8.1% stake in VALN, representing an investment of $95M. This follows a collaboration deal signed in 2020 for VLA15, which is set to enter a late-stage trial later this year.
Bolstered by PFE’s interest, VALN jumped $12.77 to close at $26.48. The rally reversed losses seen earlier in the month, with the stock coming off a 52-week low of $13.71 set last week.
Acadia (ACAD) plunged following a regulatory setback, dropping 33% on the day.
The decline came after a panel advising the US Food and Drug Administration voted against expanding the label for the firm’s antipsychotic therapy pimavanserin. The biotech had wanted to use the drug for the treatment of hallucinations and delusions associated with Alzheimer’s disease.
The drug already has FDA approval for use in treating hallucinations and delusions associated with Parkinson’s disease psychosis.
ACAD finished Tuesday’s trading at $13.01, a decline of $6.50 on the session. Shares also reached an intraday 52-week low of $12.24, reversing an attempted rebound the stock had been seen over the previous month.
Remarkable New Low
News that the company has decided to scrap a contemplated plan to divest its consumer business prompted selling in The ODP Corporation (ODP). Shares of the owner of the Office Depot and OfficeMax brands of office supply retailers fell 14%, dropping to a new 52-week low.
ODP revealed that its board of directors has unanimously determined to keep the consumer business at this time. Meanwhile, the board also decided that the firm would not pursue a previously announced separation, attributing the decision to market and macroeconomic conditions.
The office supply retailer kept open the possibility that it could restart its breakup plan in the future.
Hurt by the decision, ODP withdrew $4.75 to close at $30.25. During the session, shares reached an intraday 52-week low of $29.51.
The slide added to recent weakness in the stock. ODP has failed 22% in the past month and has lost nearly 36% of its value over the past year.
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