U.S. stocks closed mixed Monday as investors weighed a decline in biotechs and eyed comments from Federal Reserve speakers. ( Tweet This )
The Dow Jones industrial average and S&P 500 closed higher, recovering part of their Friday selloff. The Nasdaq composite eked out a 1.7-point gain, weighed by a plunge in biotechs.
The iShares Nasdaq biotechnology ETF (IBB) closed down 4.48 percent for its worst day since Dec. 23, 2014, as biotech stocks plunged on renewed attention on controversy over large price increases on certain drugs.
"The sector is very vulnerable because of the high valuations it trades at, so any bit of regulatory pressure or lower animal spirits in the market have the potential for IBB to have the day they're experiencing today," said Bradd Kern, managing director at Armored Wolf, which is short IBB.
The sharp decline in biotechs temporarily pushed the S&P 500 and Nasdaq composite into negative territory.
"Hillary (Clinton) is tweeting that she's going to take on specialty pharma," said Paul Yook, portfolio manager at BioShares Funds. "One of the biggest fears in biotech is prices."
The New York Times reported Monday how a firm raised the price of a 62-year-old drug from $13.50 a tablet to $750 overnight. The news prompted Clinton to tweet she would outline a plan Tuesday to take on price gouging.
Stocks failed to completely recoup intraday gains of more than 1 percent. The Dow closed up about 125 points after earlier rising as much as 194 points.
"I think there's still some hesitation on the part of investors. I think people want to be positive but we keep running up resistance in the short-term," said Robert Pavlik, chief market strategist at Boston Private Wealth. He is watching 1,995 to 2,000 on the S&P 500.
"The market is trying to watch these technical levels. Everybody seems to be a technician," Pavlik said. "The lows of August have still held. We're in a bit of an uptrend and we're in a pattern that could be broken either way."