Flu Fears Give Drug Makers Shot in Arm

Should the swine-flu outbreak turn out to be fleeting, so, too, could the rally in related big drug stocks.

Far be it for traders not to view any emergency as an opportunity, but big pharmaceuticals were among both the Dow Jones Industrial Average's and Standard & Poor's 500's best percentage gainers Monday. Wall Street traders are betting these companies can provide a cure to what sickens their portfolios.

Thanks to the push into big pharma, the Amex Pharmaceutical Index on Monday passed its 50-day moving average for the first time since early February and finished the day up 1.6%, at 236.98. The gains were relatively broad, with drug companies GlaxoSmithKline and AstraZeneca pacing the index.

But the possible increase of orders related to swine flu is far from determinable right now, and several pharmaceutical analysts said Monday that the impact could be minimal. A short-term flood of orders is unlikely to offset myriad other issues for pharmaceuticals, including the pressure from generic makers.

And, on a technical basis, these larger firms are pushing near important resistance levels on swine flu alone and likely to push back lower should the scare subside.

Glaxo, up 7.6% at $31.56, and AstraZeneca, up 3.7% at $36.20, are within $3 of late-January and early-February lows. The firms did move above their 50-day moving averages in the past two sessions, but it wasn't the first time this month both firms have moved above that level, with each struggling to stay above it for more than a couple of sessions.