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Biotech Stocks Were Rallying Until the Russell Got Hit with Tariff Actiions
We were having a nice rally in January 2025 until the reality of tariffs hit on Friday which killed the momentum developing off the mid-January lows. OK I’m stickin’ with my beat covering only life science markets and we’ll see if the healthcare sector can be defensive amidst the chaos. So no words about the trade wars, the DOGE takeover at Treasury, MUSK and USAID, the attempted buyout of Greenland, the harsh  sell-off in auto stocks, DeepSeek and its impact on AI and the humanitarian crisis in GAZA. The tariff actions (emergency decree) by TRUMP are only a negotiating ploy right?The correlation of the iShares Russell 2000 (IWM) to SMID biotechs was striking with the IWM down 0.9% on Friday but still holding gains for the month of 2.5%. The IBB fared better because of weighting of more large caps but still not a great week.off the recent one year highs of $149.47 hit in November..The major indices and ETF SPY and QQQ all hit one year highs recently until the milld  sell-off. Many analysts are calling for a volatile week as the market digests Executive actions by TRUMP. Large cap biopharmas performed better with two of our top picks ABBV and VRTX were up over 5% for the week. Other large cap holdings had nice gains for the month as well. BMY and GILD. The XLV is up 7% for the month recovering from a downdraft last year caused by UNH weakness. So our model ifor healthcare is intact and we should see soon if it holds up as a defensive secror offered by macro turmoil from tariffs and policies evolving from TRUMP 2.0. We survived concerns about Fed policies and interest rates. but challenges from police and MACRO lie ahead.
Here are some other takeaways from the following healthcare sector data below:

As denoted early in 2025 the technicals and earnings potential of the MedTech sector looks good for 2025 with strong Abbott (ABT) earnings and the IHI up over 9% YTD..

Even laggard JNJ is in a recovery mode up 5% MTD and well positioned in MedTech and biopharmaceuticals.

Biopharma stocks are still pretty volatile and stock picking  is important. .Look at MRK down 0.66% YTD.

The Health Sciences Funds are doing better and they can be a good option for those who don’t trade or follow the market : PRHSX and FSMEX. both up over 5% YTD.

As we have mentioned many times before traders can follow MOMENTUM using two ETFs : ARKG up 13% YTD and the XBI both did well before Friday.

Healthcare providers have gone through a bit of turmoil but the IHF is up over 9% YTD.

Technology stocks have been the leader over the past year but with AI news like DEEPSEEK rocking the chip and cloud stocks it can be too volatile.  But since technology stocks still comprise about 30% of the S&P 500 you have to keep.a large portion either with the SPY. So for now we are saying make sure you have a diversified i portfolio with an overweight in healthcare stocks and cash.As of 10:30 am EDT the sell-off has eased quite a bit with the S&P down about 1% and the Nasdaq down 1.3%. Even the Russell 2000 has come back down only 0.8%.In the green now are the following stocks: ABBV, CVX, ISRG,PG, T, UBER, UNH. The market came back after MEXICO announced that they delayed actions for one month.

Model                             PORTFOLIO           *                     2020   2020 2020 2021 2022 2023 2025   5 yr %       Stock/ETF Ticker Price Wgt Price   Price Price Price P               10/25 % 12/31 % Perf 12/31/21 12/31/22   2/1 %Perf % % H                   P   YTD   5d 2024   iShares NAZ Bio IBB 136 10 151.5 25.7 152.62 130.55 115.53 138.66 4.88 21.83 0.99 149.47                                 iShares Russell 2k IWM 163 10 196.4 18.3 222.45 174.36 175 226.48 2.5 33.35 -0.97 242.4   Merck* MRK 80 10 81.77 -10 76.64 115 101.39 98.82 -0.66 21.21 3.42 132.96   United Health UNH 330 15 350.7 27.19 502 530.27 541.21 542.49 7.24 99.12 1.87 625.25   SPDR S&P Bio XBI 117 10 140.8 48 111.96 83 66.95 92.67 2.9 3.98 0.23 104.18   Healthcare SPDR XLV 108 25 113.4 14.71 140.89 135.88 126.27 146.87 6.76 46.14 1.77 157.24   T.Rowe Price** PRHSX n/a 5 99.65 n/a 104 89 83.41 84.46 6.2 6.59   102.48   iShares U.S MedT IHI 50 10 54.83   65.85 52.57 45.75 63.81 9.36 44.69 – 64.55 nh MedTech* ABT   5 123.5   127.46 109.83 94 127.93 13.1 46.81 2.32 ]129.43   Diversfied MED JNJ new             132.05 5.21 2.2 3.63 -4.25                                 Tracking Comp                                                           ARK Genomic ARKG     93.26   61.24 28.23 24.1 26.84 13.99 -17.99 -0.89 32.96   Direx3X Bull LABU           7.66 2.74 95.68 6.31 -89.69 -37 174.12                                                               FIDO Biotech FBIOX **   25.18   19.35 16.04 14.39 19.49 3.12 -7.67   22.47   FiDO MEDtech FSMEX     76.15   83.18 60.04 51.64 66.88 7.54 10.84   69.41 nh JanusHendLifeSc JNGLX               71.92 5.94 20.69   82.6 nh                               DOW DIA     310   363.32 331.34 343 445.39 4.67 57.7 -0.29 450.94 nh S&P 500 SPY     379   475 382.41 440 601.82 2.69 87 -1.01 609.75 nh NASDAQ-100 QQQ     315   397.85 266.33 378.39 522.29 2.16 138.41 -1.39 538.17 nh Technology SPDR XLK     128.93   161.97 124.44 179.52 230.81 -0.74 142.12 -3.55 241.82 nh

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