Stocks, ETFs Pushed Higher by Health Care Sector

December 21st at 10:00am by Tom Lydon

ETF Update The health care sector led U.S. stocks and exchange traded funds (ETFs) higher this morning, helped by a Senate vote on health care reform and merger activity in the drug sector.

There was more M&A activity in the pharmaceutical sector this morning as French drug firm Sanofi-Aventis (NYSE: SNY) stepped up its move into consumer drugs by entering the U.S. market and acquiring Chattem (NASDAQ: CHTT) for $1.9 billion. Seeking to offset the loss of sales of drugs with expiring patents, Sanofi is increasing its presence in the over-the-counter drug market, reported Mimosa Spencer for The Wall Street Journal. Chattem is known for products such as Icy Hot pain-relieving patches and ACT mouthwash.

The iShares S&P Global Healthcare Index Fund (NYSE: IXJ) is up nearly 0.5% this morning and is up about 18% year-to-date. [For more stories on the pharmaceutical sector, please visit our pharmaceuticals category.]

The Treasury yield curve – the difference between the 2- and 10- year note – widened to a record as investors bet on an accelerating U.S. recovery. The yield curve touched 281 basis points earlier today, reported Cordell Eddings for Bloomberg. The benchmark 10-year note rose by 11 basis points, or 0.11 percentage point, to 3.64%, the highest since Aug. 13. The gap between yields on Treasuries and so-called TIPS due in 10 years, closed above 225 basis points for four days last week, the longest stretch since August 2008.

The iShares Barclays 7-10 Year Treasury Bond Fund (NYSE: IEF) is down nearly 0.75% this morning while the iShares Barclays TIPS Bond Fund (NYSE: TIP) is about 0.4%. (For more stories on Treasury-ETFs, please see our Treasury ETFs category).

Gold gained this morning as demand continued for the metal as an alternative investment class. The price rose to about $1115 per ounce. Prices rose as geopolitical concerns lingered about the Iran-Iraq dispute over an oil field, report Nicholas Larkin and Kim Kyoungwha for Bloomberg. On Friday, gold holdings in the biggest exchange traded fund backed by the metal – the SPDR Gold Trust (NYSE: GLD) rose by 6.1 million tons. (For more stories on gold, please visit our gold category).