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Biotech ETF Breaks Out to All-Time High Before Supreme Court Decision

tlydon@globaltrend.com (Tom Lydon)

A biotech ETF with a tilt to small-cap stocks continued its strong breakout Wednesday with a nearly 3% rally one day before an expected Supreme Court ruling on the constitutionality of healthcare reform.

SPDR S&P Biotech ETF (XBI - News) was up 2.6% in afternoon trading Wednesday on heavy volume.

XBI tracks an equal-weighted index rather than weighting stocks by market capitalization. Therefore, it allocates more to smaller companies compared with its large-cap biotech sector peers. [Choosing the Right Biotech ETF Exposure]

The biotech ETF was up 30.3% year to date as of June 26 while the S&P 500 gained 5.6%, according to Morningstar. [Biotech ETFs in ‘Stealth’ Bull Market]

XBI is trading at an all-time high.

The sector is benefitting from a favorable outlook for the drug industry and M&A speculation. Other ETFs for this industry include iShares Nasdaq Biotechnology (IBB - News), First Trust Amex Biotechnology (FBT - News) and Market Vectors Biotech ETF (BBH - News).

Healthcare ETFs were also rallying one day before the Supreme Court is expected to rule on the constitutionality of Obama’s Affordable Care Act. [Healthcare ETFs Await Supreme Court Ruling]

SPDR S&P Biotech ETF