Evidence of a stable economy and investor excitement about the impending announcement that scientists have assembled the human genome - the genetic directions for running a human body - continued to fuel a rebound in biotechnology stocks yesterday.
Gains were especially strong among stocks closely associated with genetics, with Rockville-based Human Genome Sciences gaining $22, or 18.7 percent, to close at $139.5625.
Celera Genomics Group, also of Rockville, jumped $14.25, or 15.16 percent, to close at $108.25.
The Nasdaq Biotechnology Index climbed 33.15 points to 1,102.48, led by genomics-related companies Millenium Pharmaceuticals of Cambridge, Mass., and Human Genome Sciences.
Still, the index was far off its March 6 high of 1,596.53, before worries about rising interest rates and fears that the companies wouldn't be able to patent their gene-based discoveries pushed the sector down.
Those fears have since lessened.
"I think people are really excited about the biotechs, and especially the work being done in the Human Genome Project," said biotechnology industry analyst Alan Auerbach of First Security Van Kasper in Los Angeles.
Auerbach and Eric Schmidt, an analyst with SG Cowen Securities Corp. in New York, said the perception that Federal Reserve action on interest rates might be having a softening effect on inflation without pushing the country into recession also seems to be giving investors the confidence to move out of safer, so-called Old Economy stocks back into speculative bets like biotechnology.
It is also the lukewarm feeling of many investors toward Internet stocks that is pushing some of the speculative money back into biotechnology, analysts said. Some high-profile Internet-company blowups, with companies running out of money to expand and then failing without ever posting a profit, have scared investors, analysts said.
Yesterday, the relatively dampened feelings toward pure technology stocks were reflected in the Bloomberg Top Technology Index, a price-weighted list of the 250 largest technology stocks, which gained 3.72 to 284.24.
Meanwhile, in the broader market, the Standard & Poor's 500 index fell 4.72 to 1,456.95 and the Dow Jones industrial average fell 54.66 to 10,614.06.
The attraction to biotechnology, which has pushed the Nasdaq Biotechnology Index up 14.7 percent since June 2, was generated by two impending genome-related announcements.
First, Celera President J. Craig Venter has said the company will announce this month that it substantially has completed the first-ever readout of the complete dictionary of human DNA. Second, a competing project sponsored by the National Institutes of Health and the Department of Energy plans to announce this month that it has achieved the more modest goal of sequencing 90 percent of the human genome.
Other companies that benefited yesterday were Santa Clara, Calif.-based Affymetrix Inc., whose biochips are used to help identify genes that are at work when disease is created, and Freemont, Calif.-based Protein Design Labs Inc., which develops human antibodies to fight disease. Affymetrix gained $26.50 - or 15.4 percent - to close at $198.50, while Protein Design Labs posted a 16.59 percent gain to close at $165.5625.
Bloomberg News contributed to this article.