The Monthly Monitor

Even though stocks declined in September, health care stocks and the broader S&P 500® remain solidly in positive territory for the year to date. In the U.S., stocks’ weakness is partly due to mixed economic data and the inability of Congress to agree on additional fiscal stimulus spending. In Europe and the U.S., a resurgence of the virus also weighed on economic activity, reminding investors that as goes the virus, so goes the economy. September saw the one-millionth death globally from COVID-19, and a widely available vaccine still seems to be a distant prospect. One positive for health care, however, is that the sector is among the leaders in terms of raising earnings guidance for the just-concluded quarter.

Looking at performance in the health care sector, Health Care Technology was the only industry to rise. These stocks continue to benefit from strong demand for technological solutions to lower costs and deliver health care more efficiently. Pharmaceutical stocks fell the most during the month. Investors may have been reacting to more conservative expectations around the availability of a vaccine. Health Care Providers and Services stocks were also weak. This likely reflects the companies’ exposure to pandemic-related costs and election-related uncertainty in the U.S. Biotechnology, Health Care Equipment and Supplies, and Life Sciences Tools and Services stocks all declined in absolute terms, but held up better than the health care benchmark.