The big story in U.S. markets right now is the NASDAQ decline. The index fell 2.6% on Friday, and it’s been persistently weak over the last several days.
What’s really going on is that big “momentum” names are getting drubbed, and many of these (Tesla, Netflix, FB, etc.) are traded on the NASDAQ.
The NASDAQ is also where a lot of biotech stocks trade, and the biotechs have been getting hammered.
So what’s the story? All you have to do is look at Egypt.
Here’s a one-year chart of the the biotech ETF IBB (green line) vs. the Egyptian stock market (orange line), via Bloomberg.
For a year, they have roughly moved together. They rose last spring, fell in June, rallied hard in February, jumped in March, and then tumbled hard.
Is there an intrinsic connection between biotech stocks and the Egyptian market? Of course not. Both just represent risky areas of the global marketplace that soak up cash in the good times, and then tumble when people get tense.
There’s no “story” that’s worth telling about what’s going on. Nothing specific has happened in tech or biotech or anywhere else. But things always go in waves, and the tides have come back out, leaving certain areas dry once again. That’s the story to watch, and it’s much bigger than any one industry.
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