The drubbing in the health care sector spread to pharmaceutical companies this week, with investors bloodied by a rout that left stocks trading near their lows of the year.
About $150 billion of market value was erased from companies in the S&P 500 Health Care Index in the four days through Thursday, when markets closed for the holiday weekend. The 4.4% decline left the gauge trading around lowest level since Jan. 3.
“This is third-worst that I’ve seen probably in the last 10 years,” Christian Fay, who helps manage $3.6 billion at BNP Paribas Asset Management, said in a telephone interview. “We’re just going to watch it, reassess it on Monday.”
The sell-off is being driven largely by competing policy proposals in Congress, including a move to replace private medical benefits with a government-run system, that threaten to bring a long period of uncertainty to the industry. While the broader industry index managed to eke out a small gain Thursday as technical indicators flashed oversold signals and analysts reiterated bullish calls, biotech and pharmaceutical stocks plunged.
Pfizer Inc. and Merck & Co. each fell about 1%. They were last year’s top gainers in the Dow Jones Industrial Average and now are among 2019’s biggest laggards — after UnitedHealth Group Inc. and Walgreens Boots Alliance Inc.
One Danger: Exposure to Medicare
Hospital and insurance stocks were among the week’s worst performers. HCA Healthcare Inc. slid 9.9% and traded at its lowest price since July.
“Clearly, huge stock impacts to HCA and managed care can’t be ignored and ‘collateral damage’ to sub-sectors like biopharma in the following days are reflective of a view that mutual funds are drawing down and souring” on health care, Jefferies analyst Michael Yee wrote in a note.