Health Care, Once a Leader, Stumbles

By WSJ City 

Major US stock indexes are marching to new highs but this time it's with little help from the S&P 500's best-performing sector last year: health care.

In fact it's the worst-performing sector in the S&P 500 so far this year, with shares up 3.8% compared with the broader index's 16% gain.

KEY FACTS

--- The threat of tighter health-care regulation has pulled down shares this year.

--- Walgreens Boots Alliance this month cut its annual earnings forecast amid a profit squeeze related to rebates it receives from makers of generic drugs.

--- CVS Health Corp. did the same in February.

--- Others will be closely watched. Johnson & Johnson and UnitedHealth are scheduled to release results Tuesday.

--- Concerns over stringent regulation on managed-care businesses have pressured stocks with Medicare exposure.

--- For example, shares of insurers UnitedHealth, Humana and Cigna are all down by double-digit percentages in 2019.

"Investors are scared about the massive amount of uncertainty in terms of regulation. There's a critical eye around the health-care space and drug pricing. These challenging trends do give us some worry."

Brock Moseley, founder of Miracle Mile Advisors in Los Angeles

Why This Matters

Some investors expect the sector's headwinds to subside in the long term. Health-care providers are currently leading growth in the sector and are projected to report earnings growth of 15% for the quarter, according to FactSet.

A fuller story is available on WSJ.com

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(END) Dow Jones Newswires

April 16, 2019 04:27 ET (08:27 GMT)

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