Biotech stocks rallied into 2026 as investors priced in renewed M&A activity and a friendlier interest-rate outlook. Exchange-traded fund XBI posted a sharp gain ahead of the JP Morgan Healthcare Conference, signaling increased risk appetite among institutional and retail holders. Market participants cited several announced deals and falling borrowing costs as drivers lifting small- and mid-cap biotech equities. The rebound matters because it sets expectations for dealmaking, IPOs and R&D funding priorities across the sector heading into the year’s busiest investor calendar.