There Go the Biotechs
By Ben Levisohn
It’s that time of the year, when biotech stocks are tumbling–Amgen (AMGN), Celgene (CELG) and Biogen Idec (BIIB) are all down about 3%–and investors looking at the iShares NASDAQ Biotechnology ETF (IBB) and wondering if this is the end of the sector’s astounding run.
Bloomberg News
The answer: Who knows? There’s certainly little in the way of news that would cause a sector beatdown, so that means we get to chalk it up to those nebulous “technicals” that everyone’s always talking about. In other words, more people are selling than buying (yes, that’s a joke).
Instinet’s Larry Weiss nods to Biogen’s earnings miss last week:
I guess a long term chart of the sector looks “safe”, but these names get hit pretty hard when they miss earnings. Biogen missed on Friday, and is down $40 (-9.5%) since. Money coming out of the sector is mostly profit taking, after the record highs last week and firm open this morning. Other sectors are soft as well, with tech names holding out hope for a big number from Apple (AAPL) tonight. There’s some skittishness given Biogen missed on Friday which is the best performer YTD in large cap – a lot of the names that are off the most today have outperformed the rest of their biotech peers, both large and in sm/mid-cap, and also noting a decent pickup in ETF volume in both IBB and XBI, both up over +200% vs their 5-day averages.
Evercore ISI’s Dennis DeBusschere observes that it’s not just biotech stocks that are getting crushed:
The S&P 500 has turned lower, but the internals are interesting with Biotech getting hit hard and Healthcare and Utilities two worst performing sectors. Materials and Industrials are the best performing sectors, the USD is lower, EM stocks are higher and 10yr yields, although off the day’s highs, are still up. The market performance is consistent with an improving global growth backdrop and presents some upside risk to yields (positive for Financials) if the actual economic data confirms the improvement in leading indicators.
This past weekend, I wrote about how defensive sectors like healthcare and utilities might not to be so safe after all. For one day at least, that looks to be the case.
The iShares NASDAQ Biotechnology ETF has tumbled 4.1% to $348.86 at 2:53 p.m., while Amgen has fallen 3.2% to $162.52, Biogen has dropped 2.9% to $390.02, and Celgene has declined 3.6% to $114.44.
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