By Dan Strumpf
A continued slide in biotechnology stocks pulled most major
stock indexes lower Monday, as concerns over the highflying sector
persisted.
The Nasdaq Composite Index sank 43 points, or 1%, to 4234 in
late-afternoon trading. The Standard & Poor's 500 index slipped
five points, or 0.3%, to 1862.
The market's biggest names held up better. The Dow Jones
Industrial Average shed its earlier losses, recently climbing 13
points, or 0.1%, to 16317.
Investors continue to single out once-hot biotechnology stocks
for selling for a second session. The iShares Nasdaq Biotechnology
exchange-traded fund Monday fell 3.5% and is down 7.4% over the
last two sessions.
The catalyst behind the recent slide was a congressional
complaint Friday over the high price of a Gilead Sciences Inc.'s
hepatitis-C drug. Although the complaint singled out one company,
investors and analysts say the decline across the sector reflects
broader concerns about whether shares had become too expensive
following huge gains last year.
"The momentum guys are just coming out of these stocks," said
Tom Carter, managing director at brokerage JonesTrading. He added
that negative economic data globally Monday was also denting
sentiment. "It just gives people pause."
Shares in Gilead bounced back from their early Monday losses,
but shares of other biotech companies, including Biogen Idec Inc.,
Celgene Corp. and Alexion Pharmaceuticals Inc., declined.
"The success that some of the stocks have enjoyed is making them
more vulnerable," said Michael Farr, president of the
portfolio-management firm Farr, Miller Washington, which manages
about $950 million and owns biotechnology stocks. "This strikes me
still as a short-term blip, but that doesn't say it couldn't be
more permanent."
Shares of biotechnology companies were some of the market's
strongest performers last year. The iShares Nasdaq Biotechnology
ETF soared 65% in 2013, as investors bet on big blockbuster drugs
in the pipeline. But a number of companies that saw their prices
race higher last year have come back to Earth recently. Shares in
electric-car manufacturer Tesla Motors Inc., a highflier of 2013,
were down 3.8% on Monday.
Some corners of the market were stronger. Shares in Apple Inc.
were up 1% after The Wall Street Journal reported the technology
company was in talks with Comcast Corp. for a streaming-TV service
that would use Apple set-top boxes. In addition, Apple's content
would get special treatment on Comcast's cables to bypass
congestion on the Web, the report said.
"Any time you have prospects of a [major] strategic alliance,
that's a positive, not a negative," said Peter Cardillo, chief
market economist at broker-dealer Rockwell Global Capital.
Elsewhere in the market, the yield on the 10-year Treasury note
to edged down to 2.734% from 2.748% late Friday.
Gold futures declined 1.9% to $1,311.20 an ounce, its lowest
level in more than five weeks. Crude-oil futures tacked on 0.1% to
$99.60 a barrel. The dollar gained some ground against the euro and
the yen.
European markets were lower. The Stoxx Europe 600 fell 1.1%.
Germany's DAX 30 index gave up 1.7%, France's CAC 40 shed 1.4% and
the U.K.'s FTSE 100 eased 0.6%.
Clouding sentiment in Europe were continuing tensions between
Russia and the West over Ukraine. Over the weekend, Russian forces
stormed another Ukrainian military base on the Crimean peninsula
and took some servicemen captive, after completing the annexation
of Crimea last week.
Asian markets were mostly higher. China's Shanghai Composite
gained 0.9% as investors shrugged off the weak PMI data to focus on
recent moves by regulators to allow companies to raise funds.
Japan's Nikkei Stock Average rallied 1.8%.
Among other stock movers, Herbalife Ltd. gained 7.8% after the
supplement producer agreed to nominate three more designees of
activist investor Carl Icahn to its board.
Write to Dan Strumpf at daniel.strumpf@wsj.com