Key Highlights

● The iShares U.S. Pharmaceuticals ETF outpaced the broader health care fund on Thursday.

● Eli Lilly posted Revenue of $24.40 billion and closed at a record $1,373.70.

● Merck beat estimates, raised its profit outlook and led the Dow's gainers.

● Alnylam and Iovance fell sharply, showing the rally was selective.

A run of strong drugmaker results pushed the iShares pharmaceuticals fund higher on Thursday, with Eli Lilly (NYSE:LLY) and Merck (NYSE:MRK) doing the heavy lifting as health care led the S&P 500.

A fund built for days like this

The iShares U.S. Pharmaceuticals ETF, ticker IHE, holds a basket of American drugmakers, from giants such as Eli Lilly and Merck to smaller specialty players. On Thursday, October 29, that basket rose briskly. A midday snapshot showed IHE outpacing even the broader Health Care Select Sector fund, XLV, which was itself solidly higher.

The reason was simple: the biggest names in the fund reported quarters that beat Wall Street's forecasts, and they did it on a day when investors were already looking for a place to hide from a technology selloff. Health care finished as the best of the 11 S&P 500 sectors, according to market data.

Lilly's blockbuster quarter

Eli Lilly is the heaviest hitter in pharma, and it delivered. Third-quarter revenue reached $24.40 billion, well above the $22.61 billion analysts expected, while adjusted Earnings came in at $7.48 a share versus a $6.26 estimate, according to media reports. Demand was led by Zepbound and Mounjaro, its weight-loss and diabetes treatments, according to market data.

Lilly raised its 2026 revenue outlook to $91 billion to $92 billion from $85 billion to $87 billion. Its adjusted profit forecast was trimmed to $35 to $36 a share, from $35.50 to $36.50, because of $4.57 a share in acquired research charges. Sales of Foundayo missed. Investors looked past those blemishes and sent the stock to an all-time closing high of $1,373.70, according to market data.

Merck adds momentum

Merck, a Dow component, beat on both revenue and adjusted earnings and raised its full-year profit outlook despite absorbing licensing charges. Keytruda, including its newer subcutaneous form, remained a pillar, and sales of Winrevair nearly doubled from a year earlier. Merck led the Dow's gainers, according to a market headline.

Bristol Myers Squibb (NYSE:BMY) added a quieter contribution. It edged higher after reporting revenue of $13.1 billion and raising its 2026 revenue guidance to $49.75 billion to $50.25 billion, according to media reports, even as it prepares for a step-down in Eliquis sales in 2027.

Not every drug stock joined in

The rally was selective. Alnylam Pharmaceuticals (NASDAQ:ALNY) tumbled after saying sales of its TTR Franchise were likely to land at the low end of guidance. CEO Yvonne Greenstreet said the company is "not yet satisfied with the underlying demand growth we have observed." Iovance Biotherapeutics (NASDAQ:IOVA) also fell sharply after updated lung cancer data.

That contrast matters for a fund like IHE. Its gains reflected large, profitable drugmakers with visible earnings, not speculative bets on trial results.

A rotation, not just a reaction

Pharma's strength fit a wider pattern. Alphabet (NASDAQ:GOOGL) suffered its worst day since its 2004 IPO, and investors moved money into health care, financials and real estate, one report said. The S&P 500 slipped 23.59 points to 7,720.39, yet more than 400 of its members rose.

Drugmakers offer something the AI trade struggled to provide on Thursday: earnings that do not depend on heavy Capital spending. One market analyst said "markets are no longer rewarding companies simply for investing heavily in AI," according to media reports.

What to watch

AbbVie (NYSE:ABBV) reports before Friday's open, the next major test for the group. Gilead Sciences (NASDAQ:GILD) climbed modestly in after-hours trading on Thursday after beating forecasts and raising its base-business guidance for a third time this year. If AbbVie delivers similar news, the pharma fund's Leadership could stretch into the final session of October.