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Will the S&P 500 Index Continue Its Rally in November?

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Part 7
Will the S&P 500 Index Continue Its Rally in November? PART 7 OF 9

Why the Healthcare Sector Struggled in October

Performance of the healthcare sector

The healthcare sector saw a weaker performance in October 2017. The Health Care Select Sector SPDR ETF (XLV), which tracks the performance of the healthcare sector, fell 0.5% in October 2017. On a year-to-date basis, this ETF returned nearly 19.2% as of October 30, 2017.

Why the Healthcare Sector Struggled in October

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Johnson & Johnson (JNJ), Pfizer (PFE), UnitedHealth Group (UNH), and Amgen (AMGN), major holdings of the XLV, returned nearly 7.6%, -1.5%, 6.9%, and -6.3%, respectively, in October 2017.

How reforms could impact this sector

The delay in healthcare reform is the main factor affecting the performance of this sector. However, on a year-to-date basis, it provided a strong return. Investors are gradually losing confidence in this sector as the passage of the healthcare restructuring bill is seeing delays. However, the stronger earnings growth of various healthcare companies is supporting the movement of this sector.

If tax reform happens, then we might see more upside in various sectors of the S&P 500 Index (SPY). However, if it doesn’t happen according to market expectations, then we might see some pullback in the index level and in its various sectors. If investors’ sentiment turns bearish, then we might see some money enter defensive sectors such as healthcare and consumer staples (XLP).

In the next part of this series, we’ll analyze the industrial sector.

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