Key Highlights

  • Health care edged higher on Monday, September 28, joining consumer staples and energy as the only sectors to rise.
  • Medical-device maker Teleflex was one of the best performers in the health care sector on Monday.
  • Merck finished roughly flat after licensing a preclinical program in a deal worth up to $2.13 billion.
  • The sector's biggest excitement came from smaller biotech companies, with several posting dramatic moves on Monday.

Health care was one of only three S&P 500 sectors to finish higher on Monday, September 28, on a day that brought an upgrade for Teleflex (NYSE:TFX), a big licensing deal at Merck (NYSE:MRK) and a blockbuster session for biotech.

A green sector on a red day

Health care edged higher on Monday, September 28, joining consumer staples and energy as the only S&P 500 sectors in positive territory. That stood out on a day when the index fell 59.72 points to 7,683.69 and the Nasdaq Composite lost 248.34 points to 26,820.38.

Health care is traditionally a defensive corner of the market. People need medicines, devices and hospital care regardless of the economy, so the sector often attracts money when investors grow nervous. Monday brought plenty of nerves: the 10-year Treasury Yield hit its highest level since 2007, oil rose after President Trump rejected Iran's Hormuz plan, and chip stocks slid on reports that OpenAI paused Training of some frontier models.

Teleflex led the way

Medical-device maker Teleflex was one of the best performers in the entire S&P 500. The shares jumped to close at $127.39, after BofA (NYSE:BAC) Securities analyst Craig Bijou upgraded the stock to Buy from Neutral and raised his price target to $158 from $145, citing execution under new management. Market reports ranked it the second-best S&P 500 stock of the day.

Among the Dow's health care names, Amgen (NASDAQ:AMGN) and Johnson & Johnson (NYSE:JNJ) edged up, according to stockmarketwatch, while UnitedHealth (NYSE:UNH) slipped slightly.

Merck's deal and the Patent fight

Merck finished roughly flat after licensing a preclinical oral cancer drug candidate, a KRAS G12D inhibitor called SPR2015, from China-based SciBrunch Therapeutics. Merck will pay $400 million upfront, with total potential value of up to $2.13 billion, and will take a charge of about 13 cents a share in the third quarter.

On the legal front, a Delaware judge refused to dismiss mRNA patent lawsuits brought by Monsanto, part of Bayer, against Pfizer, BioNTech (NASDAQ:BNTX) and Moderna (NASDAQ:MRNA). The claims are allegations that have not been decided, and move sizes for those stocks were not reported.

Biotech supplied the fireworks

The sector's biggest excitement came from smaller companies. Kodiak Sciences (NASDAQ:KOD) more than doubled after its Phase 3 DAYBREAK trial in wet age-related macular degeneration met its main goals for two experimental drugs. Lifecore Biomedical (NASDAQ:LFCR) soared after agreeing to be acquired by Webster Equity Partners for $6.28 a share in cash plus contingent value rights, in a deal worth up to $663.7 million.

PacBio (NASDAQ:PACB) rose after Sampled won a Department of Veterans Affairs contract worth up to $27.1 million to run genomics work on PacBio's Revio systems. Not every trial was welcomed, though. MediciNova (NASDAQ:MNOV) tumbled after its Phase 2 drug missed on a liver-fat measure, and Mirum Pharmaceuticals (NASDAQ:MIRM) dipped despite positive Phase 3 results in chronic hepatitis delta.

Rate pressure tests health care's resilience

Health care's resilience is being tested by the same rate pressure hitting everything else. Futures price a majority chance of another Federal Reserve hike in October, and biotech in particular tends to be sensitive to borrowing costs because many companies are still years from profits.

The week's data matters here too: consumer confidence and JOLTS Tuesday, August PCE Inflation Wednesday, the ISM Manufacturing survey Thursday and the September jobs report Friday. For the sector itself, watch Kodiak's plan to file for approval of its lead drug in the fourth quarter, Teleflex's follow-through after the upgrade, and whether defensive buying holds if yields keep climbing.