Healthcare Investors Aren’t Scared of Trump or Biden
U.S. elections and healthcare stocks have often been a losing combination. This year, with another contest looming, investors are piling in.
The S&P 500’s healthcare sector has advanced 7.6% in 2024. That is its best start since 2017, according to Dow Jones Market Data. The sector, which often fails to keep the pace in a bull market, has nearly matched the performance of the S&P 500.
The rally also bucks recent history for the sector ahead of a presidential election. The stocks underperformed the broad market by 5 percentage points in 2016 and again in 2020. In 1992, a year when health policy was a major election issue, the sector fell 18%.
Shares of Eli Lilly, the biggest company in the group, have gained 30% in 2024, powered by booming sales of its weight-loss drugs. DaVita, which operates dialysis centers, has rallied 33%. U.S.-listed shares of Novo Nordisk, which makes Ozempic, are up 31%.
Hospital chain HCA Healthcare has advanced about 20%. “Overall, there’s less concern around a politically driven drawdown this year," said Will Sevush, healthcare strategist at Jefferies. “It’s a lot tamer relative to the past at the moment." Investors in the industry pay close attention to political developments.
Changes in laws or regulations can have a large impact on sales and profits for health insurers, hospitals, and drug and medical-device companies. A 2015 vow to crack down on high drug prices from then-presidential candidate Hillary Clinton sparked a major selloff in biotech stocks. The Nasdaq Biotechnology Index fell 13% in a single week and 30% over six months.
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