The S&P Biotechnology Select Index continued to hold above the 100 day moving average as the S&P 500 decisively broke down below its own 100 day following the hot inflation numbers last week.
Biotech investors are hoping a resilient business model, capital return to shareholders, positive clinical and regulatory updates and creative destruction will help the sector outperform as the Fed ratchets rates higher later this week.
The contrast between FedEx (FDX) suspending guidance, suggesting a global recession is underway and suffering their biggest drawdown since 1980 and bellweather Johnson & Johnson (JNJ) announcing a new $5 billion share buyback program is case in point.
Upside from clinical data releases continued when Akero Therapeutics (AKRO) rallied >100% on an favorable update from their phase 2B HARMONY trial in patients with pre-cirrhotic nonalcoholic steatohepatitis (NASH). Creative destruction was also on display as former high flying Rubius Therapeutics (RUBY) announced a 75% headcount reduction, sale of their manufacturing facility and other cost saving measures. RUBY now trades at ~$50 million market cap, down from $2.5 billion a little more than a year ago.
Hurricane Fiona provides a timely reminder on the importance of being able to weather the storm.