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Goldman Charge Curbs Enthusiasm for Market Risk

 Larger Cap Healthcare Stocks Holding Up Well

The SEC charges against Goldman Sachs have taken the MO out of the market with speculative issues down considerably. As of midday trading the Dow is down 1.2%. NASDAQ down 1.5% and the S&P down 1.6%.Stocks are off their lows. Large Cap healthcare and biotech stocks were less hit by the news as one would expect with the healthcare ETF XLV down less than 1% and most large cap biotech and drug stocks very stable: Abbott(NYSE:ABT),Amgen (NASDAQ:AMGN),Becton Dickinson (NYSE:BDX),Gilead(NASDAQ:GILD),Johnson and Johnson(NYSE:JNJ) and Pfizer(NYSE:PFE).

Smaller Cap biotechs which have been in a bull market for over 12 months saw more selling with the Rayno Life Science Index of 35 mid and small caps down 1.75%. The IBB is down 1%. Speculative issues which have been riding the biowave were hit harder with Dendreon(NASDAQ:DNDN) down about 2%, Keryx (NASDAQ:KERX) down 5.5% and Somaxon (NASDAQ:SOMX) down 5%.

Bucking the trend in the small caps were ImmunoGen(NASDAQ:IMGN) up 7% and Inspire(NASDAQ:ISPH) up 11%.ImmunoGen had a favorable update from its partner Roche on a cancer drug using the HER-2 targeting antibody for treatment of breast cancer. Inspire benefited from Japanese approval of its dry eye treatment DIQUAS with its partner Santen. Both stocks are at or near multi-year highs.

With regard to Goldman, structured investments products such as CDO's and other derivatives have done nothing for the life science sector in general and in fact  these vehicles have taken money out of classical financing such as IPO's, PIPEs and venture capital.

But fear is back in the market and speculation in smaller cap biotechs should ebb. Risk is off.