Healthcare Sector Experiences Fluctuating Fund Flows

Top 10 Things You Need to Know: 

1. Healthcare is often seen as a defensive sector due to its constant demand and some insulation from the economy.
2. Despite this, the sector is down nearly 2% for the year, while the S&P 500 index has gained over 17%.
3. The latest week saw investors pull a net $1.4 billion from the sector, marking the most significant weekly outflow since May 2022.
4. Notwithstanding, the healthcare sector has seen the third largest inflows of any sector year to date.
5. Some investors are bullish on healthcare stocks, thinking that the Federal Reserve’s interest rate hikes will impact the economy.
6. Other investors are less pessimistic as the economy has been resilient and shows few signs of weakening.
7. The Atlanta Federal Reserve’s GDPNow forecast model showed the economy likely growing at a 5.6% annualized rate in Q3, but this estimate may drop as more data comes in.
8. Political and regulatory risks are also considerations, with President Joe Biden’s administration releasing a list of 10 prescription medicines subject to price negotiations.
9. Earnings in the healthcare sector are expected to lag in 2023 due to a decline in COVID-related revenues.
10. Margie Patel, a senior portfolio manager at Allspring Global Investments, thinks healthcare stocks will remain sluggish until the unemployment rate rises.

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