Could Tax Reform Boost the Healthcare Sector?
Performance of the healthcare sector
The healthcare sector remained the second largest gainer of the S&P 500 Index (SPY) so far in 2017 in September. The Health Care Select Sector SPDR ETF (XLV), which tracks the performance of the healthcare sector, rose nearly 16.5% on a year-to-date basis as of September 28, 2017.
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Major XLV holdings Johnson & Johnson (JNJ), Pfizer (PFE), UnitedHealth Group (UNH), and Amgen (AMGN) returned nearly 11.7%, 7.8%, 21.6%, and 23.1%, respectively, on a year-to-date basis, as of September 28, 2017.
The healthcare sector fluctuated significantly in the first half of 2017. The delay in the passage of a healthcare restructuring bill in Congress primarily affected the performance of this sector. However, on the other hand, the stronger earnings growth of various healthcare stocks supported the movement of this sector.
Currently, many market participants are expecting that tax reform could boost the pharmaceutical industry. It could also accelerate merger and acquisition activity in the industry.
In the next part of this series, we’ll analyze the performance of the industrial sector.