Any investor believing that fundamental changes in the markets could lead to a big breakout for long-dormant giant drugmakers should think again, even with this week's rally.

This is a presidential election year, when drug stocks don't typically do very well thanks to political debates about the cost and access of health care. Throw in a legislative push to import cheaper drugs from Canada and you have all the makings of an uncertain investing environment, no matter how much cost-cutting and molecule-discovering the companies achieve.

And even though conventional wisdom might say that drug stocks are something of a safe haven when interest rates are on the rise, analysts and strategists alike are cautious about the sector's somewhat uncertain prospects.

"You can't be a market-timer," said Elizabeth Bernstein, an equities analyst at Morningstar who follows drug companies. "You might not see improvement until after the election."

Despite that advice, investors have spent the past two days rotating money into pharmaceuticals shares, worried about the potential impact of higher interest rates on other sectors. On Thursday, with the Dow spending most of the day in the red before crawling out in the last hour, the Amex Pharmaceutical Index tacked on a 3.5% gain, bringing its two-day runup to 4.3%. Merck ( MRK), Pfizer ( PFE), Johnson & Johnson ( JNJ) and Eli Lilly ( LLY) were all up more than 3% Thursday.

No doubt, drugs can provide a cushion during bad times. For the four years ending Dec. 31, 2003, the total return -- price appreciation plus reinvestment of dividends - for the S&P 500 Index was a minus 19.7%. For the Amex Pharmaceutical Index of 15 large companies, the total return was 2.53%. But enough drug stocks failed to equal the broader market's big gains in 2003.

Right now, the best that could be said about the big drug players is that they are doing less bad over the last four weeks than over the last 52 weeks when compared with the S&P 500.

For the 52 weeks ended April 14, stocks in the S&P 500 had a total return of 29.7% while the Amex Pharmaceutical Index gained 8.8%. For the four weeks ended April 14, the S&P 500 was up 2.24%, while the Amex Pharmaceutical index rose 1.39%.

If you liked this article you might like

Are Fund Managers Better Than Their Funds?

Are Fund Managers Better Than Their Funds?

Can Regional Brokers Keep Outperforming?

Can Regional Brokers Keep Outperforming?

Wyeth Deal's Big, but Pfizer Still Needs a Blockbuster

Wyeth Deal's Big, but Pfizer Still Needs a Blockbuster

Cosmetic Surgery Stocks Keep Stiff Upper Lip

Cosmetic Surgery Stocks Keep Stiff Upper Lip

For Abbott, Diversity Remains Paramount

For Abbott, Diversity Remains Paramount