Democrats' Comments Give Health-Care Stocks a Stronger Pulse--Update

By Alexander Osipovich 

Beaten-down health-care stocks saw some relief Thursday, a day after most Democratic presidential candidates shied away from forcefully endorsing plans to nationalize the U.S. health-insurance industry.

The moves come after such stocks have lagged behind the broader market in 2019. Insurance stocks in particular fell sharply in April, when Vermont Sen. Bernie Sanders introduced a bill that would extend government-run health insurance to every American, dubbed Medicare for All.

But at Wednesday night's closely watched debate with 10 Democratic contenders, most hesitated to embrace a total federal takeover of health care. Massachusetts Sen. Elizabeth Warren and New York City Mayor Bill de Blasio were the only two who raised their hands when asked if they would eliminate private insurance as part of a Medicare-for-All plan.

"There was trepidation entering the debates, and we came away without a single new idea on healthcare reform," said Josh Raskin, an analyst with Nephron Research who covers health insurers.

Shares of insurance company UnitedHealth Group Inc. gained 1.2%, while Anthem Inc. and Humana Inc. were up 1.3% and 1.2% respectively. That helped make health care one of the best-performing sectors in the S&P 500 on Thursday.

Historically, investors have been attracted to health-care stocks for their growth and defensive nature. But they can also be sensitive to shifts in government regulation, concerns that have pummeled their prices in recent months.

Mr. Raskin said such jitters are now subsiding. "With every passing day, we move further from the tail risk of a single-payer system, an ideal that is clearly not shared by the majority of the Democratic candidates, " he said.

Still, health care remains the worst-performing sector in the S&P 500 this year, having risen 6.7% from the start of 2019 while the broader index has climbed nearly 17%.

Other health-related stocks were also up Thursday. CVS Health Corp., whose business spans from pharmacies to insurance plans since its acquisition of Aetna last year, rose 1.9%.

Rite Aid Corp. soared more than 20% after Amazon.com said it would allow shoppers to pick up purchases at specialized counters in more than 1,500 Rite Aid locations.

Walgreens Boots Alliance Inc., which has struggled this year with a slumping business and ailing stock price, was up 4.1% after it reported better-than-expected earnings.

Write to Alexander Osipovich at [e-mail]

(END) Dow Jones Newswires

June 27, 2019 16:53 ET (20:53 GMT)

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