Healthcare Stocks in the Red amid Broader Market Sell-Off

Most healthcare stocks fell yesterday

Yesterday, most healthcare stocks were trading below their previous day’s closing price. Biotech players seem to have been hit the worst. However, all other sectors including pharmaceuticals, medical devices, and hospitals saw significant weakness. Johnson & Johnson (JNJ), Boston Scientific (BSX), Pfizer (PFE), Merck (MRK), and Bristol-Myers Squibb fell 1.1%, 2.1%, 2.6%, and 3.9%, respectively, yesterday. Major biotechnology players Gilead Sciences (GILD), Amgen (AMGN), Biogen (BIIB), and Novo Nordisk (NVO) fell 2.30%, 2.33%, 2.04%, and 1.81%, respectively.

Healthcare Stocks in the Red amid Broader Market Sell-Off

What triggered the broader market sell-off yesterday?

Over the last week, the S&P 500 Index and the NASDAQ Composite Index have fallen 3.5% and 5.5%, respectively. Yesterday, these indexes registered a decline of 3.3% and 4.1%, respectively. The Healthcare Select Sector SPDR ETF (XLV) dropped ~2.4% yesterday. The market witnessed a major sell-off that reflected the negative investor sentiment due to a number of macroeconomic factors that could impact corporate performances during the upcoming earnings season as well as global growth. The US-China trade war is one of the major concerns.

Recently, the IMF warned that trade tensions might impact growth and financial flexibility around the world. The IMF decreased its global growth forecasts by 0.2 percentage points for 2018 and 2019. Also, the increasing bond yields pose a concern for stock investors, as they could lead to increased borrowing costs for companies, which would hurt their bottom lines. Currently, the ten-year US Treasury yield is at its seven-year high. The Federal Reserve is expected to raise interest rates this year and next year.