Biotech ETF Declined Amid Rising Interest Rates

The SPDR S&P Biotech ETF experienced a 30-day downturn as Federal Reserve benchmark rate hikes pressured valuations.

Updated on Sept. 25, 2026 in Biotech

Biotech ETF Declined Amid Rising Interest Rates

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Is now a good time to invest in biotech stocks despite current interest rate pressures?

The SPDR S&P Biotech ETF, which holds over 160 companies, has fallen 8.3% over the past month. Despite this recent dip, the fund remains up 27% year to date as investors weigh high Treasury yields against a heavy pipeline of clinical catalysts.

Why it matters

Rising interest rates and Treasury yields at their highest levels since 2007 have exerted valuation pressure on the biotech sector. Investors are now focused on upcoming company-specific clinical data as a potential driver for recovery.

The XBI ETF maintains exposure to over 160 companies to manage performance dispersion. While the index is up 27% year to date, rising interest rates at 4.00% continue to weigh on the broader sector.

The players

Federal Reserve

The central banking system of the United States that manages the nation's monetary policy and benchmark interest rates.

TG Therapeutics

A biopharmaceutical company focused on the acquisition, development, and commercialization of treatments for B-cell diseases.

Cytokinetics

A late-stage biopharmaceutical company focused on discovering and developing muscle activators to treat cardiovascular and neuromuscular diseases.

Eton Pharmaceuticals

A specialty pharmaceutical company focused on the development and commercialization of innovative drug products.

Harrow

An ophthalmic-focused pharmaceutical company that markets and sells prescription eye care products.

The details

While the ETF as a whole has faced downward pressure, individual stocks have shown significant volatility with Eton Pharmaceuticals up 229% and Harrow down 31% this year. Meanwhile, firms like TG Therapeutics are targeting a $1 billion Briumvi exit run rate, and Cytokinetics expects its MYQORZO sales to track toward $18 million for the third quarter.

July 2023 marked the previous date of the last Federal Reserve rate hike.
Cytokinetics recorded $8.9 million in wholesale sales during Q2 2026.
Projected Q3 2026 MYQORZO sales are estimated to reach $18 million.
TG Therapeutics expects to present Phase 3 ENHANCE results on October 21-23, 2026.
Phase 3 data for subcutaneous ublituximab is expected by Q1 2027.

Inflation
Sept. 18
Federal Reserve Increased Interest Rates by 25 Points
Stock Markets
Sept. 18
US Stocks Declined as Treasury Yields Rose
Inflation
Sept. 18
Bank of America Warned Fed Rates Could Exceed 5%

The Tech Race

The current valuation environment marks a return to high-yield conditions not seen since the 2007 10-year Treasury yield peak. This dynamic forces biotech firms to prove clinical value against a backdrop of increasing capital costs.

Retail investors holding biotech ETFs may see increased portfolio volatility as interest rate cycles impact high-growth holdings. Investors should track upcoming clinical catalyst dates to understand the potential for individual stock performance shifts.

The takeaway

Biotech investment remains highly sensitive to macroeconomic interest rate shifts despite individual company growth. Investors should balance exposure to clinical trial outcomes with an awareness of broader monetary policy trends.