Issue Date: March 2, 2009
Chemical, Pharmaceutical Stocks Hit Long-Time Lows
The Dow Jones Industrial Average's 3.4% fall on Monday, Feb. 23, took it down to 7,114.78—half the peak level it achieved on Oct. 9, 2007. Chemical stocks followed suit. Standard & Poor's chemical stock index, which includes firms ranging from Dow Chemical to Sigma-Aldrich, dipped to 162.81—a 49% drop from the same day in October 2007. However, S&P's health care index, which includes major pharmaceutical, biotech, and medical device companies, experienced a less precipitous drop over the 16-month period, falling 30% to 292.88. Analysts agree that the softer fall for drug stocks reflects the industry's overall more secure position compared with the chemical industry, which serves basic industrial markets. "Despite their problems, the drug companies have plenty of cash," says Michael A. Martorelli, an analyst at investment banking and capital advisory firm Fairmount Partners. "They are among the highest dividend payers around right now. I don't think anybody doubts the survivability of the big pharma or even midsized pharma companies."
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