Goldman Sachs led gigantic rally in bank stocks; Caterpillar had good year
By Marley Jay
AP Markets Writer
NEW YORK (AP) - In a solid year for stocks, graphics processor maker Nvidia stood far above its peers on the Standard & Poor's 500 index. The company's stock more than tripled for the year. But it was far from the only company that made a notable move. Goldman Sachs helped a rally in financial companies and Caterpillar contributed to an industrial boom on Wall Street, while drug companies like Mylan suffered big drops.
CHIP CHIP, HOORAY
Nvidia's stock jumped after each of its quarterly earnings reports, and the company was part of the big technology rally over the summer. Shares rose further in September when Nvidia said it will work with Baidu, a Chinese e-commerce company, to develop an autonomous driving system. Nvidia was also one of the biggest winners on the S&P 500 in 2015. Its shares ended 2012 at about $12 and traded above $110 at the end of 2016. It rose 256 percent and traded at all-time highs for most of the year.
DRUG STOCKS IN PAIN
Five of the 10 largest losses on the S&P 500 in 2016 went to drug companies. Endo International, the maker of Percocet, plunged 74 percent and reached 13-year lows. In February, the Irish drug and medical device maker said it will set aside $834 million to cover costs from possible product liability lawsuits related to its vaginal mesh implants, which have been linked to thousands of injuries. It also said it will wind down its Astora women's health unit. In May the company disclosed a government inquiry into its relationships with pharmacy benefits management companies and also slashed its guidance. Many drug companies weakened as investors wondered if the federal government will take steps to reduce drug prices. Biotechnology companies like Alexion and Vertex took some steep losses.
OH MY-LAN
Dutch drugmaker Mylan sank 30 percent during an eventful year. First the company fended off a buyout offer from Teva Pharmaceutical Industries. Mylan resisted Teva's $40 billion bid because it wanted to buy Perrigo, an Irish company that makes drugs and ingredients. But Perrigo shareholders never warmed to Mylan's offers and the deal fell by the wayside. Later in the year, Mylan became the target of public and Congressional ire over repeated price increases on its EpiPen shot. Ultimately all three companies saw their stock prices suffer. Perrigo finished the year down 41 percent and Teva plunged 45 percent, partly because of worries about weak drug prices.
GOOD AS GOLD-MAN
Goldman Sachs led a gigantic rally in bank stocks after Donald Trump was elected president. Investors bid up bank stocks following the vote because they expect rising interest rates, more government borrowing, and faster economic growth as well as looser regulation that could help profits. Bank stocks far outperformed the broader market and Goldman made some of the biggest gains. The stock neared all-time highs in December and finished the year up 34 percent. Goldman has contributed about one-fourth of the Dow's gain since the election. If that weren't enough, three men with links to the firm will take top roles in Trump's administration: his choices for senior adviser, Treasury Secretary and head of the National Economic Council are all Goldman alumni.
VERY HUNGRY CATERPILLAR
Caterpillar, one of the smallest companies on the blue-chip Dow Jones industrial average, had a better year than any other Dow component as it rose 39 percent for the year. The construction and mining equipment maker recovered from a deep funk early in the year as investors thought the Chinese economy might be weakening fast. That would have hurt Caterpillar's sales in a key market. But the stock recovered as signs came in that the U.S. and China were doing better than many had feared. When Trump was elected, investors bid up the shares even further as they expected Caterpillar to benefit from faster economic growth thanks to spending on construction and infrastructure projects. Industrial stocks reached all-time highs in the weeks after the election, although Caterpillar is still well below its price from mid-2014.
METAL MANIA
The price of gold rose 7 percent in 2016 and the price of copper jumped 18 percent after falling for each of the three previous years. The price of gold jumped at the start of the year as investors feared for the health of the global economy. That didn't cancel the losses from the years before, but it was a giant relief for metals companies. Gold producer Newmont Mining, which had seen its shares fall for five years in a row, rebounded 81 percent. But after a big rally in the first half of the year, gold prices slumped as investors regained confidence in the U.S. economy. That confidence, and the hope that President-elect Donald Trump will help encourage more economic growth, led to a big surge in copper prices in October and November. Gold and copper producer Freeport-McMoRan doubled in value for the year. However the stock is nowhere near its prices from a few years ago.
Published: Fri, Dec 30, 2016
