Health care stocks posted their best monthly gain since April 2020 as investors seek shelter in a weakening economy.
The S&P 500 Health Care Index rallied 9.6% in October, its best month in two and a half years and beating the greater benchmark’s 8% rise. Hospital operator Universal Health Services Inc. -- fresh off its best week on record -- and diabetes device maker Dexcom were among the top performers driving the sector higher.
The gains come as investors look for safe bets amid rising interest-rates and a looming recession. Pockets of the health sector, from insurers to large drugmakers, tend to do well in downturns as demand for their services isn’t swayed by the economic outlook.
While wipeouts from major tech stocks have been grabbing the headlines, earnings beats in health care have been rewarded more than any other sector, according to Asad Haider, a Goldman Sachs Group strategist.
He said health care’s defensive appeal and outflows from other sectors, including tech bellwethers, are helping bolster the stocks. Disappointing earnings from tech companies stand in contrast to the beats-and-raises from Biogen Inc., Gilead Sciences Inc., Merck & Co. Inc. and others, Haider wrote in a note to clients dated Friday.
The group has charged higher for the past four weeks, its longest weekly winning streak since December 2021.
And more earnings reports are coming. The best health performers this year are drug distributors McKesson Corp., which is expected to report earnings on Tuesday after a 57% rally this year, and Cardinal Health Inc., which is set to share results on Friday after a 47% gain.
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