The SPDR S&P Biotech ETF Lingers in the Red as of December 3



Markets go down on December 3

Markets went down on December 3, 2015, owing to the global implications of the ECB’s (European Central Bank) announcement that it will continue its QE (quantitative easing) policy until March 2017. The ECB also cut its deposit rate by ten basis points, to -0.3% from -0.2%. But what kind of effect will this have on the Fed’s impending rate hike decision? This is the big question, which remains needs to be seen.

Meanwhile, on December 3, the S&P 500 lost 1.5%, the Dow Jones Industrial Average went down by 1.4%, and the so-called riskier assets, biotech stocks, and ETFs lost considerably.

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XBI follows suit

The SPDR S&P Biotech ETF (XBI) went down by 3.9% on December 3, which represents the third consecutive day of declines for the ETF. XBI closed at $68.91. The biotech ETF was trading 6.3% lower than its 100-day moving average price of $73.62 and 2.3% lower than its 20-day moving average price of $70.58.

The above table reflects the returns and moving averages of XBI and SPY, as well as the top and bottom performers on December 3. Out of 101 stocks that XBI has exposure to in its portfolio, only two stocks gave positive returns, whereas 99 stocks ended in the red, indicating a widespread bearishness among the biotech stocks.

XBI’s leader on December 3

Dyax Corporation (DYAX) was the outperformer of the day, showing gains of 12.2%. The company’s stock went up following its announcement of the termination of Hart-Scott-Rodino waiting period, which should allow the acquisition by Shire (SHPG) to complete by the first half of 2016.

According to the press release, Dyax announced that “the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), applicable to its proposed acquisition by Shire Pharmaceuticals International (“SPI”), an indirect wholly owned subsidiary of Shire PLC (“Shire”), was terminated by the United States Federal Trade Commission (“FTC”) on December 2, 2015. Dyax appreciates the FTC’s cooperation and its prompt review.”

DYAX closed at $37.43 and was trading above its 20-, 50-, and 100-day moving averages. Dyax has a weight of 1.6% in XBI’s portfolio.

XBI’s laggard on December 3

Insys Therapeutics (INSY) was the biggest laggard, with a return of -18.55%. The stock went down due to profit booking, with high trading volumes of ~3.5 million shares being traded, compared to the stock’s five-day average trading volume of ~630,000 shares per day.

Continue to the next part of this series for a telling look at the performance of XBI’s large-cap companies like Vertex Pharmaceuticals so far in December 2015.


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