Innovation Observatory

The pulse of healthcare quickened last week as stocks gained 2%. According to an article in Baron’s, this gain places healthcare as one of the top performing groups in the S&P 500.

Until this point, healthcare hasn’t been fairing too well in 2019. “The S&P 500 Health Care Sector index has returned just 8% this year, while the S&P 500 has gained 22%. That makes the sector the second-worst performer this year, besting only the beaten-down energy stocks”, the article reported.

A few factors contributed to the recent uptick:

• Reported earnings from UnitedHealth exceeded expectations.
• Pharma companies received a boost after talks of a possible opioid settlement.
• Large managed-health companies might continue with business as usual after news that Medicaid for all may not be the primary choice for all democratic candidates

The healthcare sector remains resilient against a growing concern for slowing U.S. economic growth. Only seven healthcare stocks are expected to see a decline in earnings growth, which is only one more from the year prior. “This trend makes healthcare a relatively reliable area for investors seeking to avoid companies with slowing growth prospects,” writes UBS strategist Francois Trahan.

Read more from Barron’s