Health care stocks of virtually all stripes and sizes suffered another bout of heavy profit-taking by institutions as broad declines in stocks today saddled the Dow Jones Industrial Average with a 0.5% decline. The Nasdaq composite did worse, losing 0.9% as both major indexes closed near session lows.
XMeanwhile, banking shares also felt the selling pressure amid a squeeze in the difference in yields between short- and long-dated Treasury bonds. The yield on the benchmark U.S. 10-year note slipped 3 basis points to 2.69%, narrowing the spread vs. 3-month T-bills to 24 basis points.
The The S&P 500 fell nearly 0.7%. Volume jumped on both main exchanges, according to early figures. The declines in higher turnover vs. the prior session suggested intense selling by mutual funds, hedge funds, banks, insurers and other institutional investors.
Small got smacked with much heavier losses.
The Russell 2000 fell 2%. At 1536, the popular small-cap gauge still holds a 13.9% year-to-date gain. The S&P SmallCap 600 also backtracked 2%.
Among small and mid-cap growth stocks within the IBD 50, PRA Health Sciences (PRAH), Five Below (FIVE), Meritor (MTOR) and PagSeguro Digital (PAGS) led the downside with drops of 2% to 4%.
Five Below, which sells a variety of items including sporting goods, toys, apparel and home interior items targeting children, saw volume jump 39% above average as the stock crossed further below its 50-day moving average. Analysts polled by Thomson Reuters see earnings in the January-ended fiscal fourth quarter rising 34% to $1.58 a share. The Philadelphia-based retailer is likely to report full results in late March.
Other small caps in the health care arena that saw unusually big declines in heavy volume:
Horizon Pharma (HZNP): The stock gapped down and dropped more than 6% to 25.48. Volume grew 64% above its 50-day average. The specialist in arthritis and pain treatments still holds a 12% profit after a second breakout past a 22.76 buy point in a 12-week cup with handle.
Beyond The Dow Jones: The Stock Market Direction Today
IBD changed its outlook for growth stocks to "market in confirmed uptrend" on a Day 7 follow-through that took place on Jan. 4. Back then, the S&P 500 soared 3.4% to 2531 in a sharp increase in NYSE turnover vs. the prior session. Since then, top growth stocks have showcased key buy points and opportunities to make strong short-term gains.
Read The Big Picture column each day to get an accurate reading and potantial changes in the current stock market trend.
New Laggards In The Dow Jones
While Dow Jones industrial components Walgreens Boot Alliance (WBA) and UnitedHealth Group (UNH) continued to pace the current pullback, biotech and medical equipment firms also showed weakness.
According to IBD Stock Checkup, the Composite Rating for UnitedHealth has withered to a 50 on scale of 1 (awful) to 99 (awesome). The stock has sunk 16% below a 52-week high. The S&P 500, at 2771, is less than 6% below its own 52-week peak at 2940.
Abiomed (ABMD), a former standout in IBD's top growth stock lists including Sector Leaders, dropped more than 4% to 317.85 in above-normal turnover. The heart pump innovator slid well beneath its key 50-day moving average for the first time since mid-January.
Intuitive Surgical (ISRG), the No. 1 maker of robotic surgery systems, notched a third straight decline. Shares fell 2% to 536.51. But volume came in lighter than usual. The stock continues to fashion the right side of a new base.
Internet content firms did relatively better. IBD's internet content industry group has risen almost 13% year to date.
Google owner Alphabet (GOOGL) edged down roughly 0.4%, snapping an eight-day win streak. Volume fell sharply below average.
The stock is still working on a brand-new base but now shares lie just 9% below a 52-week peak.
IBD 50 name Kirkland Lake Gold (KL) also held up well, finishing flat for the day. But Innovator IBD 50 (FFTY) ETF slumped 1.3%.
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