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Markets extended their gains this week, with the Dow and small-cap stocks leading. Pharma, biotech, utilities, and renewables drove most of the upside. Meanwhile, crypto surged, and gold and silver continued their steady climb. Oil prices declined.

What It Is : A government shutdown occurs when Congress fails to pass a funding bill, forcing many federal agencies to temporarily close and suspend operations.

Why It Happens : It usually stems from political gridlock between Congress (House and Senate) and the White House. Typically when Republicans push for spending cuts or policy conditions that Democrats oppose, such as healthcare or social programs.

Economic Impact : Each week of shutdown can shave about 0.1–0.2% off US GDP growth, delay federal paychecks, and freeze major economic reports like jobs and inflation data. Roughly 900K federal employees are furloughed without pay.

Market Reaction : Historically, markets react mildly, with most of the volatility occuring in the lead up. Stocks often stabilize or rise as investors anticipate a resolution will be found.

The iShares US Pharma ETF (IHE) closed up over 7.5% this week, led by the big 5, thanks to Pfizer's deal with the admin. The deal will slash drug prices to match developed nations' levels and pledged $70B in US manufacturing/R&D for a 3-year tariff exemption, easing fears of import tariffs on branded drugs and adding policy certainty that also boosted peers.

Here is a closer look at the 5 biggest US pharma stocks :

A powerhouse in diabetes, obesity, and neuroscience. Its pipeline is heavy on GLP-1 and Alzheimer’s drugs.

⭐ 💊 Mounjaro/Zepbound (GLP-1 for diabetes/obesity)

A diversified leader in immunology, oncology, and neurology. Its pipeline includes novel immune therapies and cancer drugs.

⭐ 💊 Stelara (Immunology)

Once known for Humira, AbbVie is pivoting to Skyrizi, Rinvoq, neuroscience, and oncology. Its development pipeline spans ~90 programs.

⭐ 💊 Skyrizi & Rinvoq (Immunology)

An oncology leader anchored by Keytruda. It’s also expanding in vaccines and cardiovascular/metabolic fields, with a broad new pipeline under development.

⭐ 💊 Keytruda (Oncology)

A multi-area pharma focused on vaccines, rare disease, and oncology. Its R&D pipeline includes next-gen vaccines and novel biologics.

⭐ 💊 Prevnar (Vaccine)

Markets continue to grind higher, although there are signs of cooling momentum, particularly across AI and tech, after months of gains. The ongoing US govt shutdown will be in focus again, potentially delaying key data like the trade balance and jobs report. Additionally, Fed speakers (including Chair Powell) and the start of Q3 earnings season will set the tone for the week.

(subject to Govt shutdown ending)

Before diving into this week’s pick, here’s a snapshot of how our recent picks have done :

Due to ongoing political scrutiny regarding Kenvue’s Tylenol brand by the US admin, this is a high-risk play as sentiment is weak. Investors should be aware of potential near-term volatility that will likely be driven by news headlines and political developments rather than company fundamentals.

Kenvue, one of the world's largest consumer health companies, was spun off from J&J in 2023. Kenvue owns an iconic portfolio of household brands such as Tylenol, Benadryl, Neutrogena, Listerine, and Band-Aid. With annual revenue exceeding $15 billion, Kenvue's stable business is pillared on consumer demand for essential, everyday health products, making its revenue resilient and non-cyclical.

Kenvue is a mature business with $15B+ annual revenue and a 58% gross margin. It trades at a deep discount, with a forward P/E of ~14.50 vs the sector mean of ∼21.0, and has an attractive 5.28% dividend yield. However, sales growth remains in the low single digits, the balance sheet carries a high debt/equity ratio of 0.81, and its Tylenol brand (10% of sales) poses a risk of further valuation cuts if political/legal headwinds worsen.

Kenvue has been in a downtrend since breaking below its long-term support at $20.32, following the Tylenol headlines. The stock is now deeply oversold on both its daily and weekly RSI (Relative Strength Index), a momentum indicator that measures how overbought or oversold a stock is. Given this setup, I expect these oversold readings to ease as value buyers step in, potentially driving a mean reversion back toward the next resistance level of $17.15 in the short term.

Dynatrace is a software intelligence company that sells an AI-powered observability platform. As companies move their apps and data to complex, multi-cloud environments, Dynatrace acts as a brain that monitors every single piece of their software infrastructure. It automatically collects, analyzes, and uses AI to find the root cause of performance issues such as slow websites and failing servers, often before users even notice. This is a crucial service for banks, retailers, and any large business that depends on a perfect digital experience.

Dynatrace differentiates itself through its AI-driven Davis engine, which automatically detects anomalies, pinpoints root causes, and reduces the need for manual troubleshooting. This saves IT teams hours of manual work. By contrast, competitors like Datadog focus more on dashboards and metrics, while Splunk is still known for older log-based systems that often require more human analysis. It also works seamlessly with big names like AWS, Azure, and Google Cloud, making it a go-to choice for modern enterprises.

Dynatrace shows an attractive mix of growth and profit rarely seen in cloud software. Its Annual Recurring Revenue (ARR) hit $1.82 billion in its most recent quarterly earnings (up 16% YoY), with total quarterly revenue at $477 million. It also has a strong 30% operating margin and a healthy 56% free cash flow margin (percentage of revenue converted to cash), reflecting an efficient, profitable business.

Dynatrace faces strong competition from rivals like Datadog and Splunk, all fighting for leadership in cloud monitoring. Furthermore, the 16% ARR growth is slower than past periods, meaning the company must prove it can re-accelerate growth by successfully expanding its platform. Investors must also monitor the sales strategy restructuring announced during its most recent quarterly earnings, as execution issues here could lead to temporary disruption and volatility.

Ali is a full-time equity trader and investor based in Dubai, and the founder of First Mile Investing. He left his corporate career in 2024 to pursue his passion for the markets. He founded First Mile Investing to help beginners take their first confident steps into investing, with the goal of making the process less intimidating, more accessible, and empowering for everyone.