Don't look now, but there's some competition brewing atop the equity market standings.
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There’s a surprising new champion of the stock market
Biotech stocks are the surprising new champion of the stock market, surging more than 9% last week amid speculation of a reprieve on drug pricing.
A couple of chemists celebrating biotech's big week.
US indices have been ruled by mega-cap technology companies and financial firms for much of the period since the presidential election in November. But after some bullish news last week, drug developers now look poised to give them a run for their money.
The Nasdaq Biotechnology Index (NBI) surged 9.2% over the five days, its biggest increase since the week of the election. Portola Pharmaceuticals and Clovis Oncology led the charge for the 162-company gauge, both climbing more than 55%.
In addition, an exchange-traded fund tracking the gauge absorbed more than $700 million during the three days ended Friday, the biggest inflow since early November for a period of that length.
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While a significant portion of post-election stock market gains have resulted from optimism around proposed political policies, biotech drove returns the old-fashioned way: by getting good news.
According to recent reports from Kaiser Health NewsPolitico
Now that things have been looking up for biotech, investors are starting to pay a higher premium to protect gains.
Beyond the recent news flow, investors may also be buying biotech shares in preparation for the earnings recovery the sector is expected to enjoy in the second half of the year.
Drugmakers will grow profits by 5.7% in the fourth quarter, lifting its full-year 2017 earnings expansion to 4.8%, according to estimates compiled by Bloomberg. While that will lag the broader S&P 500, it's a welcome sign for a an industry just finding its legs again after some turbulence.
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