State Street SPDR S&P Biotech ETF

XBI

Market cap $7.9B

The Investment Committee give you their top stocks to watch for the second half.

The Investment Committee give you their top stocks to watch for the second half.

The State Street SPDR S&P Biotech ETF (XBI) made its debut on 01/31/2006, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.

Drugmakers are making notable deals, biotech is coming back, and much of the worry about tariffs and interest rates has faded away.

M&A activity is surging. Donald Trump's penchant for deregulation is boosting optimism.

The healthcare sector's renewed momentum offers fertile ground for investors wanting to outperform by picking the best stocks from the broader indexes. Goldman Sachs identified 29 healthcare stocks in the Russell 1000 universe with positive recent consensus revisions to 2026 EPS estimates and that trade at attractive valuations. Goldman sees "more opportunity for alpha than beta" as wide return dispersion and increasing M&A activity in healthcare may favor selected winners.

XBI hits a fresh 52-week high after a sharp rebound in biotech momentum fueled by favorable regulation, valuations and improving funding trends.

US Biotech is lagging other categories in terms of IPO and M&A, but could be overdue for a recovery with capital costs falling. Funding conditions are important for XBI which contains plenty of reflexive, cash-burning businesses. Valuations also look tempered, but P/E is of limited use given the confusion caused by unprofitable businesses in the ETF, but broader indices are historically cheap.

State Street SPDR S&P Biotech ETF (XBI) has surged nearly 30% YTD, regaining the attention of Wall Street. The outperformance is due to an equal-weight structure, which makes it a high-beta instrument, particularly dependent on the small/mid U.S. biotech segment. For this reason, in my opinion, it remains more sensitive to the dynamics that affect early-stage (pre-revenue / clinical stage) companies.

Jared Holz, Mizuho, joins 'Fast Money' to talk the uptick in biotech and pharma M&A, what it is signaling, and how to play it.