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As the Nasdaq Composite continues to stumble its way toward a bear market, biotech shares are worsening the collapse of the tech-heavy index.

While the declines in big tech and internet names such as Apple Inc., Facebook Inc. and Amazon.com Inc. have been in the spotlight, the Nasdaq Biotechnology index has fallen about 25 per cent since hitting its closing high for the year in late August, a greater decline than the broader Nasdaq in that period.

Biotech shares had been a bright spot supporting the Nasdaq’s strong run for about three-quarters of this year. But as they falter, analysts say that broad macro uncertainty is undermining the sector’s appeal more than any industry-specific setbacks.

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Health care represents about 11.5 per cent of the Nasdaq, and the vast majority of those stocks are biotech or small pharmaceutical companies, according to Refinitiv data.

The biotech index on Friday touched its lowest point since January, 2017, as it shed another 2.9 per cent. It is down about 14 per cent for the year.

Salim Syed, biotech analyst with Mizuho, said investor concerns about the broad economic and political climate, including trade tensions between the United States and China and rising interest rates, have weighed relatively heavily on biotech shares.

“Largely the impact has been macro and/or political headlines that have impacted the sector, but fundamentals haven’t really changed,” Syed said.

Jeff Jonas, a healthcare portfolio manager with Gabelli Funds, said a broad “risk-off” sentiment could be hurting biotech shares, with investors possibly more concerned that a weakening economy will dry up deal-making activity in the industry or money from other sources.

“The biotech funding environment has been wide open for a couple of years now,” Jonas said. “If we do go into a recession, that would be a much tougher environment.”

Only 11 of the 190 names in the Nasdaq biotech index have posted a positive return since Sept. 30, Brian Skorney, a biotech analyst with Robert W. Baird, said in a research note on Friday.

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“Our sense is that folks have basically given up for the year and are resigned to watching a 2008-like collapse,” Skorney wrote in his note.

The broader Nasdaq appeared poised on Friday to confirm a bear market, defined as a 20-per-cent decline from its previous high. The Nasdaq Composite was down 21 per cent from its Aug 29. closing high, falling about 2 per cent on the day.

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