Drug stocks take a hit
Gilead shares drop nearly 10% on lowered sales guidance. But the strength of technology shares may be pulling money out of health care.
Updated at 4:55 p.m. ET
Not a good day for health care shares, especially those of Gilead Sciences (GILD).
Gilead makes a number of important drugs used to treat AIDS-related ailments, and its shares were down 9.6% to $40.76. Late Tuesday, it trimmed its guidance for full-year sales.
At the same time, Merck (MRK) was off 3.7% to $34.74 -- the biggest decline among stocks in the Dow Jones Industrial Average ($INDU).
Gilead didn't have a bad quarter. Earnings of 99 cents a share beat Street estimates by 3 cents. Revenue was up 36% to $2.08 billion; the consensus was $2.07 billion.
Sales of most of its drugs beat estimates -- except one.
Sales of Atripla, used to treat HIV infection, increased 36% to $692.9 million for the first quarter of 2010, up from $509.9 million in the first quarter of 2009. However, analysts were looking for sales of $726 million.
But another issue is that companies are still taking charges related to the taxation of retirement health benefits under the new heath reform bill. Abbott Laboratories (ABT) included that in explaining why it expects charges totaling 34 cents a share to hit earnings this year. Abbott was down 2.4% to $51.78.
Another is Venezuela's January devaluation of its currency, the bolivar.
But there is also a sense, at least according to Art Hogan, the chief market analyst at Jeffries, that technology shares are sucking money from other parts of the market.
The catalyst: "Strong earnings from the sector, including Apple (AAPL)," he told Reuters.
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[BRIEFING.COM] Stocks continue trading near their recent levels, with the Nasdaq (+0.4%) maintaining its lead.
Earlier, we mentioned that the financial sector may hold the key to the afternoon performance among the major averages, and that is holding true thus far. The S&P 500's retreat from mid-session highs has been accompanied by weakness in the financial sector, which now trades lower by 0.2%.
The growth-sensitive group holds a modest loss as most large components hover ... More
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