The stock market received a huge confidence boost last week as investors seemed to grow more comfortable with the likely future course of monetary policy. Although most market participants expect the Federal Reserve to raise interest rates further in the coming months, they are increasingly convinced that the central bank will have to reverse course within the next year to support the economy. That led to Dow Jones Industrial Average (^ DJI 0.57%), S&P 500 (^GSPC 0.79%)Y Nasdaq Composite (^IXIC 0.84%) markedly higher late last week, and as of 9 am ET on Monday, futures for all three indexes were slightly higher.
Many investors have been following Warren Buffett closely in recent months, as his Berkshire Hathaway has bought more and more shares of the oil and gas giant Western Petroleum (OXY 1.63%). Berkshire confirmed its sizeable ownership position in Occidental late last week, and perhaps due to some investor confusion, its shares rose again. However, Monday’s big move among mega-cap stocks was in healthcare, such as bristol myers squibb (BMY 5.41%) made an announcement that had shareholders celebrating.
Buffett Reports on His Great Power Holding, Again
Shares of Occidental Petroleum were up more than 2% in premarket trading early Monday. The company has been in the spotlight all year as Buffett and Berkshire’s growing interest in its stock, as well as favorable energy markets have dramatically improved its financial performance.
The move came amid some confusion over the latest news about the relationship between Buffett and Occidental. The size of Berkshire’s position in energy stocks requires it to provide regular updates on its ownership stake when it makes purchases, and on Friday night, in a filing with the US Securities and Exchange Commission ( SEC), Berkshire reported that it has a total of 272.2 million shares. That figure includes warrants that Berkshire can convert into Occidental common stock at its election, and the filing indicates that its total holdings comprise a 26.8% stake in the oil and gas company overall.
Some news sources took this as a sign that Berkshire had increased its holding from its previously reported 20.2% position. However, the total stock position matches what Berkshire reported to the SEC in early August, when the company purchased nearly 6.7 million shares.
The confusion is likely due to Berkshire’s interim filing in mid-August, which reflected Occidental’s holdings as of June 30 that did not include purchases since then. Furthermore, Berkshire’s treatment of guarantees to purchase additional shares is also likely to be inconsistent across media sources.
Regardless, Berkshire was given permission to own up to 50% of Occidental’s shares. Whether that will happen remains to be seen, but it’s clear that Buffett still believes the oil and gas giant is a good fit in the current market environment.
Bristol gets good news
Shares of Bristol Myers Squibb rose 7%, making it a big winner among the largest companies in the market. The drugmaker announced a key decision on a candidate treatment that could mean a significant increase in sales.
Bristol reported late Friday that the US Food and Drug Administration (FDA) had approved the use of its Sotyktu oral treatment for adults with moderate to severe plaque psoriasis. The move came after two key phase 3 clinical trials of the drug showed that Sotyktu showed superior efficacy over both a placebo and AmgenThe treatment of competition, Otezla.
Investors are excited about the opportunity for Bristol to control a huge market. Psoriasis affects 7.5 million people in the US alone, and as the first FDA-approved oral treatment in nearly a decade, Bristol Medical Director Samit Hirawat believes Sotyktu represents a new standard of care. care for those with the disease.
Shares of Bristol Myers Squibb have held up well in 2022, rising substantially since the beginning of the year in a bear market. Developments like this are the reason why, and investors are hopeful that more good news is coming for Bristol.
Dan Caplinger has positions in Berkshire Hathaway (B shares). The Motley Fool holds positions and recommends Berkshire Hathaway (B shares) and Bristol Myers Squibb. The Motley Fool recommends Amgen and recommends the following options: Long $200 January 2023 Call Options on Berkshire Hathaway (B-Shares), Short $200 January 2023 Put Options on Berkshire Hathaway (B-Shares) and Call Options short $265 in January 2023 on Berkshire Hathaway (B shares) . The Motley Fool has a disclosure policy.