Key Highlights

● Azenta fell Friday with a group of life-sciences tools stocks in the S&P SmallCap 600.

● Myriad Genetics, Moderna, Repligen and PacBio also fell sharply, with PacBio plunging.

● The Health Care Select Sector SPDR Fund hit a record while smaller names sold off.

● Thermo Fisher, Danaher and Abbott report Oct 21; the Fed decides Oct 28.

Tools names under pressure

Azenta (NASDAQ:AZTA), which provides sample storage, management and genomic services to drug developers and research labs, fell on Friday along with a group of life-sciences tools stocks in the S&P SmallCap 600. Market commentary said the shares moved with the sector on rising-rate concerns rather than on company-specific news.

Market reports grouped Azenta with Myriad Genetics (NASDAQ:MYGN), Moderna (NASDAQ:MRNA), Repligen (NASDAQ:RGEN) and PacBio (NASDAQ:PACB), all of which fell sharply. Repligen, a bioprocessing supplier, moved lower with the sector, while PacBio plunged. Moderna tumbled as investors trimmed positions ahead of Phase 3 data on intismeran, its cancer therapy developed with Merck (NYSE:MRK), according to market commentary.

Companies such as Azenta depend heavily on spending by biotech and pharmaceutical customers, many of which rely on capital markets for funding. That makes the group sensitive to shifts in interest rates and financing conditions.

The rate backdrop

The 10-year Treasury yield ended the session at roughly 5.1, after topping 5.30 earlier in October, its highest level since 2002, per market data. Although the yield came down over the week, it remains elevated, and clinical-stage and tools names were among the session's laggards.

A head investment strategist at the Franklin Templeton Institute said that "pressure across the long end of the curve acts as a valuation headwind for risk assets."

Federal Reserve Chair Kevin Warsh, speaking at an IMF gathering in Bangkok, gave no signal on the October decision. "I don't prejudge meetings," he said. The Fed lifted rates by a quarter point in September, its first increase in three years, and futures still price roughly one more quarter-point hike by December.

A split in health care

The selling in smaller health-care names contrasted with strength among the sector's larger, cash-generating companies. The Health Care Select Sector SPDR Fund hit a record, market data showed, as investors rotated out of technology and into defensive sectors. McKesson (NYSE:MCK) set an intraday record high.

The broader market was weak. No closing level for the S&P SmallCap 600 was available, but the Russell 2000 fell 45.90 points to about 2,721, according to market data. The S&P 500 lost 84.62 points to 7,659.44, the Nasdaq Composite fell 572.99 points to 26,140.03 and the Dow Jones Industrial Average slipped 175.28 points to 52,002.41. Technology stocks led the decline amid concerns about how the build-out of artificial intelligence will be financed, while energy was the top-performing sector as crude prices climbed. The Cboe Volatility Index rose 3.53 points to 19.99.

Azenta Looks to Oct 21 Tools Earnings

Rates will stay in focus. Housing starts are due Tuesday, Oct 20, and the University of Michigan sentiment survey arrives Friday, Oct 23. The Fed's next policy decision comes on Oct 28, followed on Oct 29 by the personal consumption expenditures price index and the first estimate of third-quarter GDP. Bank of America still expects the Fed to raise rates in October, while futures markets have reduced the odds of a move this month.

Next week's earnings could offer a read on tools demand. Thermo Fisher Scientific (NYSE:TMO), Danaher (NYSE:DHR) and Abbott Laboratories (NYSE:ABT) all report before the open on Wednesday, Oct 21. Commentary from the largest tools providers on biotech customer spending and bioprocessing orders is often watched by investors in smaller peers such as Azenta and Repligen.