Why Agenus, Amarin, and Axsome Therapeutics Shares Slumped Today
U.S. stock markets are under heavy pressure today after two reports on job openings and factory orders came in weaker than expected. The key issue at play is a growing concern that the Federal Reserve's rate hiking campaign may spark a deep and long-lasting economic downturn later this year. Topping it all off, OPEC+'s decision to reign in oil supplies this May has stock investors worried that the central bank may have to keep raising rates to tamp down inflation. Further rate hikes, in turn, may accelerate an economic downturn.
These concerns spilled over into risk-laden biotech equities today. Shares of clinical-stage cancer immunotherapy company Agenus (NASDAQ: AGEN) were down by 7%, cardiovascular care specialist Amarin (NASDAQ: AMRN) saw its stock dip by 4.3%, and the stock of central nervous system drug developer Axsome Therapeutics (NASDAQ: AXSM) was down by 4.8%, as of 3:19 p.m. ET Tuesday afternoon.
Why are these macroeconomic concerns weighing on small and mid-cap biotech stocks today? The long and short of it is that investors simply aren't in the mood to take on any form of risk right now. The core reason is that risk-free assets such as U.S. Treasury bills are offering near decade-high yields. Biotech stocks like Agenus, Amarin, and Axsome, by contrast, are essentially high-risk, high-reward stocks that don't offer a dividend (a form of downside protection).
Source Fool.com
