Health Care (OW) led the S&P 500 sectors this week, rising 4.3%. Energy (OW) was next at 2.5% and is up 41.2% ytd, the best of the 11 sectors (chart). Materials (OW) also finished higher, up 2.3%. The other eight sectors fell. Utilities (OW) was the weakest at -3.6%, followed by Industrials (OW) at -3.4% and Information Technology (MW) at -3.2%.
Here's more on Health Care, Information Technology, Consumer Staples (UW), and Materials:
(1) Health Care: Biotech leads the way. The biotech rally has been running on M&A, hope, and hype. Last week, the sector delivered great news. Moderna and Merck announced on Wednesday that their personalized cancer vaccine met its primary endpoints in a Phase 3 trial, the first individualized mRNA therapy ever to do so. Moderna rose 177%, the largest one-day gain by any S&P 500 stock this century, then gave back 22% on Thursday. Biotechnology gained 8.5% for the week (chart)
Analysts have been marking up the sector. Two weeks ago, they expected earnings to grow 0.1% in 2026. They now expect 2.0% growth this year, with 22.2% penciled in for 2027. Biotechnology is the leading swing factor, forecast to shrink 6.4% this year and grow 47.1% next year (chart).
The sector's forward earnings is up 6.6% ytd, and the forward P/E is up 6.3% ytd, pushing the price index up 12.6% (chart). At 19.1 times forward earnings, the sector trades slightly below the S&P 500's 19.8.
