Pffft: That's the sound of the air leaking Thursday from the one-day biotech and drug rally.
Neither sector was holding onto gains made Wednesday, girding the view that yesterday's euphoric buying was just
coattail effects, and had little to do with improving fundamentals or renewed investor confidence.
The Amex Biotechnology Index is down 3% in recent Thursday trading, one day after posting an almost 9% gain. Likewise, the Amex Pharmaceutical Index is off 0.5%, cutting into Wednesday's nearly 3% gain.
Like yesterday's buying, today's selling mimicked the goings-on in the
and occurred across the board. Most notably, trading was marked by a dearth of real news.
fell 10% Thursday to $11.30, after rising 16% in the previous session.
is off 1.5% to $48.37,
fell 3% to $38.34, and
Human Genome Sciences
lost 2.5% to $15.22. All three stocks posted strong gains Wednesday.
is the one biotech stock to buck today's trend in a big way, jumping 42% to $7.79 after the receiving regulatory clearance Wednesday evening to sell a generic and injectable form of the cancer drug paclitaxel.
In the pharmaceutical sector,
erased yesterday's gains, falling just over 1% to $28.17.
is off 3% to $65.58, while
eased 1.5% to $36.60.
, there is little courage among die-hard biotech and drug investors to get back into the market in any appreciable way. Big-cap biotechs remain relatively expensive, despite the selloff. Some of the sector's smaller names are returning to fair valuation levels, but again, volatility is keeping many professionals on the sidelines.
Biotech mavens are watching closely the Amex Biotech Index, hoping to see it stay at or above the 400 level. When the index sank below that key support level Monday, what was left of the enthusiasm for biotechs this year pretty much evaporated.
Big Pharma is just as sickly. A lackluster first-quarter earnings season proved once again that earnings growth at the major drug companies is slowing, hurt by surging sales from generic competitors and lackluster drug development pipelines.