Market watchers might have spotted a big fall in the value of the Nasdaq index.
It fell by over 3% yesterday, prompted by investors moving out of technology and biotech stocks.
This represented the worst day for the index since 2011.
Nasdaq is an American stock exchange, the second largest in the world following the New York Stock Exchange.
Looking solely at biotech stocks, the Nasdaq biotechnology index fell by 5.6% yesterday, now down 18.8% since its record close on 25th February.
This puts it close to entering bear market territory.
What is driving this negative investor sentiment towards biotech stocks?
A couple of weeks ago there was a large sell-off in Gilead stocks; Gilead Sciences is an American biotechnology company that discovers, develops and commercializes therapeutics.
Gilead has recently been under fire from insurers and legislators for the $1,000-a-pill price of its Sovaldi drug, designed to treat Hepatitis C.
One technical analyst has described Gilead as a ‘roof leaker’ stock, which means it has crossed its 200-day simple moving average on higher than normal relative volume.
This technical analysis of stocks can identify companies experiencing a breakdown in share price which can then result in massive losses, although of course this is not guaranteed.
Clearly one stock alone has not been the cause of the overall market decline, which has spread beyond the Nasdaq alone.
A ‘wall of worry’ contains various factors which could have contributed to investor fears about future market direction.
These worries include QE, unemployment, investor sentiment, the European economy, China, Russia and the Ukraine, earnings season and momentum stocks.
For investors holding a diversified portfolio across different asset classes, these sorts of short-term concerns and market falls should not pose a major concern to investors who take a long-term view of the world.
