Update-2 3/2…Broad rally takes all sectors higher. Powell confirms 0.25% rate incr and talks the talk.A bit of rotation to the re-opening trade with industrials, ag and rails moving up.
- Core large caps up:ABBV, GILD, JNJ, REGN,VRTX.
- Med-tech up: ABT,IHI,ISRG,MDT, SYK.
- SMID lagging but bought more IWM.
- UNH and XLV up nicely.
Update-1 1:30p EDT Stocks are in a broad rally, update at close. Shows importance of diversification. Russell 2000 up over 2%.
News update from WSJ.
Crispr Patent Ruling Picks Winners in Dispute Over Gene-Editing Technology
Decision marks the latest chapter in long-running saga about who owns the rights to revolutionary biomedical technology
Stock update: CRSP up 2.83% to $59 level, NTLA up 7.33% to $85 level. IBB up over 1%.
Healthcare Stocks Rally Through Turmoil
- Stock Picking is key because ETFs are lagging..
- Volatile markets will require more re-balancing of portfolios.
- SMID biotechs still lag as speculation abates.
Healthcare and biopharma stocks gained in the last two days of trading in a volatile week in a major reversal. The IBB ended flat for the week at $126.29 after dipping to lows of $118.63 midweek but is still down 17.25% YTD and considerably off August 2021 highs of $177.37 The broader based healthcare XLV gained 1.93% for the week and is still down 7% YTD and off November highs of $141.98. United Health (UNH) at $475 is the dominant stock of the sector is still down over 5% YTD.off 2021 highs of $509.Earnings and guidance of the large cap biopharma stocks was good and the threat of Medicare negotiated drug prices off the table for now.
As you well know the market has been racked by geopolitical turmoil from the war in Ukraine. But layered upon that in 2022 has been the reality of rising interest rates from changes in FED policy requiring more urgent action to combat inflation .Rising interest rates reduce returns on earnings. We only recently have navigated through the omicron phase of the COVID-19 pandemic which disrupted the market just as we were entering the “re-opening” phase of the economy. The pandemic created a boom in revenues for vaccines, diagnostics and therapeutics for many healthcare companies. However the boom cycle of the pandemic created uncertainty for forecasting the product mix in 2022. Vaccine stocks like BNTX and MRNA have been hit hard from August highs. And Pfizer was weak despite good earnings because of vaccine forecast uncertainty.
Biopharmaceuticals Remain a Strong Hold
We recently summarized the financial metrics of large cap biopharmaceutical stocks and they remain strong holds. The best performers over the past month are: ABBV, AZN, BMY, LLY, REGN and VRTX. Gilead Sciences (GILD) was down 11.21% and Pfizer (PF) is down 9.17%.
We will update our healthcare portfolio model this week. One major trend to watch could be a continued rotation to financials materials and energy, Also look for momentum returning to small caps (IWM) which would help biotechs.
Update at midday as sanctions hit Russian financial system.