Healthcare companies in the NASDAQ sank more than 5 percent Friday as the overall index took a violent beating, and momentum stocks seems to have suffered high volume sell-offs. These are, of course, stocks that tend to move quickly with high yields, and they are stocks that investors look proudly upon. Netflix, Google, and Apple are three commonly known momentum stocks. The NASDAQ composite fell over 110 points to 4127.73 at the close on Friday, a huge 2.6 percent drop. There are losses across the board, but healthcare took some of the biggest hits.
The DOW and S&P 500 are not too much worse for the wear. The overall DOW index is down 0.96 percent, and the S&P 500 is down 1.25 percent.
Fluidigm Corporation, the biggest loser in the health category, dropped 11 percent to $38.19. Anacor Pharmaceuticals Inc. also dropped nearly 11 percent down to $17.06. Just behind them both was Vanda Pharmaceuticals Inc., which dropped 10 percent down to $15.07.
Similar drops occurred in other indices. Health saw a 1.0 percent overall drop in the NYSE composite, while the S&P 500 saw a 1.4 percent drop in health-related businesses.
These drops, which appear to be uniform across most sectors of the NASDAQ, come along with high volume momentum stock sell-offs. Analysts claim that this activity is the result of the tendency for these stocks to have “internal correction.” In other words, momentum stocks such as Netflix and Amazon have entered into a period of quick cash-ins. Amazon sank over 10 points on Friday down to $323.00, and Netflix dropped 17.38 points down to $337.31. Momentum stocks in the NASDAQ index are down for the count, and healthcare is taking a huge beating in the background. This activity suggests a possible momentum reversal in the near future.
Today’s sell-offs hit some fairly large names. Google is down 3.4 percent. Priceline is down 3.2 percent. Facebook is down 2.8 percent. Intuitive Surgical is down 5.6 percent, and Biotechnology as a whole is down 2.4 percent.
There were few winners in the health-related brackets. IMS Health Holdings rose over 15 percent after releasing shares at a $20 IPO. IMS Health Holdings now has a market cap of $6.64 billion.
Exact Science Corporation shares managed to rise almost 6 percent to $13.66 during the Friday sell-offs. Nevertheless, analysts feel that shares of the molecular diagnostics company will probably drop in the future. Analysts cite poor growth in earnings per share. The company has announced an underwritten public offering of 10 million shares at $12.75 to the public.
Osiris Therapeutics also saw significant gains of 3.09 percent on Friday. The regenerative medicine company focuses on stem cell research, and has recently announced big changes in staffing. Their chief science officer has offered a letter of resignation, and a new head has been promoted to their research and development department. Share volume remained average during today’s sell-offs.
The Friday sell-offs have undone a week’s worth of gains. The NASDAQ index has even sunk beneath the previous low point in March, which was around the 4150 level. The intense sale action brings the index composite back to levels from the first half of February.
Friday’s steep downhill spiral leaves doubt about what may happen during the next week, but some analysts suggest that more downward action may take place. Healthcare may continue to stay down, and momentum stocks in the NASDAQ index might continue to take a beating. It will be interesting to see whether or not momentum stocks like Netflix hold their levels after the Friday selling bonanza.
By Luke Sargent