Healthcare stocks may struggle to gain momentum as Democrats prepare to take over Congress.
Jared Holz, who covers health care for Mizuho, says the sector’s outlook is uncertain because of the likely impasse among lawmakers.
“I really don’t see much happening in the next couple of years,” the company’s industry specialist told CNBC’s “Fast Money” on Wednesday. “I’m not sure you want to own everything, but you can pick the names…Pharma is trading more expensively than the tech sector for the first time in 20 years. So I’ve stepped back from the pharma sector. I’d go into the medtech sector.”
THE State Street Health Care Select ETF (XLV) jumped 3% a day after Election Day.
“You had this very strange situation where generally all of these categories didn’t work in tandem, and they did.. So I think some things are a little bit wrong,” Holz said, a day before health care was swept up in Wall Street’s selloff on Thursday.
According to Holz, the real health care boost could come if a Democrat wins the White House in 2028.
“Then I think some of Trump’s strategies have been undone. That’s where I think health care could actually perform well,” said Holz, who added that it depends on Democrats holding on to the Senate and House.
For investors who favor health care, Holz said each subsector should be treated differently.
“Can we get some of the regulations that have been put in place over the last couple of years and reverse them in the short term? I don’t necessarily believe that,” Holz said. “But if you do, then you probably want to go long some of these medical device stocks that are at their lowest levels in several years or so.”
THE Select State Street Healthcare ETF ended virtually flat this week. This is an increase of approximately 32% since President Trump took office in January 2025, breaking the record. S&P500 by almost 9 percentage points.
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