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Biotech Does the Happy Dance, Bears Cry Bubble


Today's financial recap and tomorrow's financial outlook.

US markets quieted down following Wedneday's FOMC-driven explosion to the upside.

The S&P 500 finished down 0.5% at 2089.29 as the index failed to extend yesterday's 1.2% rally.

But despite any meaningful news, the biotech sector powered higher, with the iShares NASDAQ Biotechnology Index ETF (IBB) rising 2.0% to $365.25.

One factor in biotech's amazing rally has been its superior earnings growth. According to statistics published by FactSet, the biotechnology industry grew earnings per share by 35% in Q4 vs. 4% for the S&P 500. Additionally, the sector has seen heavy M&A activity.

Nonetheless, many traders believe biotech is in a bubble based on its price performance. IBB is now up 20.4% year-to-date following a 33.6% rally in 2014.

Biotech's strength helped push the NASDAQ Composite into positive territory.

Jobless claims were 291,000 last week, which was basically in-line with the 293,000 consensus. The March Philly Fed Index came in at 5.0, missing the 7.0 consensus. The Leading Economic Indicators Index for February was in-line at 0.2%.

The American Association of Individual Investors released its latest sentiment survey today. 27.2% of those surveyed were bullish, down from 31.4% last week. The figure was 45.2% on February 26, which was the day after the S&P 500 hit its 2119.59 all-time high.

The US dollar resumed its uptrend today with a 2.0% gain against the euro that more than erased yesterday's loss.

US Treasury yields also reversed higher, driving bonds to give back some of yesterday's gains.

Over in the commodities pits, gold traded 1.7% higher to $1170.70 despite the US dollar's momentum, while crude oil declined as traders continued to worry about oversupply conditions.

Tomorrow's Financial Outlook

The Baker Hughes Rig Count is tomorrow's lone US economic report, and it shouldn't impact anything beyond energy.

Canada will report CPI and retail sales numbers at 8:30 a.m. ET.

Consumer names Darden Restaurants (DRI) and Tiffany's (TIF), as well as homebuilder KB Homes (KBH), will report earnings before the open.

Twitter: @T3Live
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