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The S&P 500 Index Saw Slight Improvement in April: What's Next?

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Part 7
The S&P 500 Index Saw Slight Improvement in April: What's Next? PART 7 OF 7

What Should Investors Expect from Healthcare Sector?

Healthcare sector

The Health Care Select Sector SPDR ETF (XLV), which tracks the performance of the healthcare sector, saw an improved performance in April 2017. It rose nearly 1.4% during the month. Major healthcare stocks such as Johnson & Johnson (JNJ), Pfizer (PFE), Merck & Co (MRK), and Amgen (AMGN) returned -0.96%, -0.93%, -1.7%, and -0.34%, respectively, in April 2017.

What Should Investors Expect from Healthcare Sector?

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XLV showed a small improvement in April. The overall positive sentiment after the first round of France’s presidential election mainly drove the index. However, in March, the health care sector showed a poor performance.

Healthcare legislation

The market showed nervousness in the midst of Trump’s efforts to replace the Affordable Care Act. Market participants are waiting to see policy reformations that will boost markets (QQQ) (SPY) (IVV). Investors are now focusing on the government’s proposed fiscal stimulus plan and its tax restructuring plan.

During his election campaign, Trump promised that he would replace the Patient Protection and Affordable Care Act, which was passed in March 2010. The act aimed to require and provide health insurance (XLV) (VHT) for all. Trump promised to repeal Obamacare and replace it with free market competition. He promised a patient-focused healthcare act with affordable drug prices and lower health care costs. Trump’s replacement plans are seeing delays in Congress, which is worrying some investors.

Fund managers’ view

Some fund managers believe that focusing first on the replacement of the Patient Protection and Affordable Care Act is a mistake. Read What Byron Wien Thinks about Plans to Replace Obamacare to learn more. He believes Trump should first focus on his economic program and job creation, which are major drivers for the markets.

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