BofA Merrill Lynch Downgrades GDP Forecast and 2 Other Hot Stocks to Watch

Bank of America Corp. (NYSE:BAC): Current price $14.67

Drawing attention to ramifications of the government shutdown, last week, Bank of America Merrill Lynch cut its GDP growth forecasts for the third and fourth quarters due to attendant “significant spillovers into the private sector.” It appears that the temporary fix to the situation that Congress passed Wednesday night did not impress the bank’s economists, who have downgraded the first-quarter 2014 forecast. Ethan Harris, Bank of America Merrill Lynch’s co-head of global economics research, wrote in a note to clients: “We have made a minor change in our GDP forecast: we continue to see just 2-percent fourth-quarter GDP growth, but we have cut first quarter back from 3.3 percent to 2.8 percent.”

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Advanced Micro Devices Inc. (NYSE:AMD): Current price $3.6

AMD shares are down more than 12 percent Friday in heavy trading after the company forecast fourth-quarter sales that may lag estimates, while its concentration on orders for game-console chips could not compensate for a slide in PC demand. In a statement, AMD said revenue will rise by 5 percent, plus or minus 3 percentage points, from $1.46 billion in the third quarter, implying fourth-quarter sales as low as $1.49 billion versus consensus of $1.52 billion, according to data compiled by Bloomberg. Chief Executive Rory Read is trying to reconfigure AMD as a maker of custom chips that bundle graphics and other capabilities, which has won orders from Microsoft, Sony, and Nintendo in video-game machines, but the majority of AMD’s revenue comes from PCs.

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Ariad Pharmaceuticals Inc. (NASDAQ:ARIA): Current price $2.71

Ariad announced that  it is stopping a study of its approved drug Iclusig as a first option for leukemia patients due to the risk of blood clots, and shares are down about 40 percent on Friday, setting a new 52-week low at $2.62. The study, Epic, was evaluating Ariad’s only marketed product against Novartis AG’s Gleevec in newly diagnosed chronic myeloid leukemia. In a Friday statement, Ariad said it and the Food and Drug Administration agreed to end the trial “in the interest of patient safety.”

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