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Why the prognosis for healthcare stocks is uncertain ahead of Congress’ new makeup
Healthcare stocks may struggle to gain momentum as Democrats prepare to take control of Congress, according to Mizuho healthcare specialist Jared Holz. He expects political gridlock to limit near-term change, leaving investors to choose carefully among healthcare companies and subsectors.
The State Street Health Care Select ETF rose 3% the day after Election Day, then was caught up in Thursday’s market sell-off and finished the week virtually flat. Holz said pharmaceutical shares looked expensive compared with technology stocks, while some medical device stocks were near multi-year lows. The ETF has gained about 32% since President Trump took office in January 2025, nearly 9 percentage points ahead of the S&P 500; Holz sees potential for the sector if a Democrat wins the presidency in 2028 and the party also holds both chambers of Congress.
In short
- Mizuho’s Jared Holz expects political gridlock to cloud healthcare stocks.
- He favours selective investing, including some medical device companies.
- The healthcare ETF is up about 32% since January 2025.
Explained simply
Healthcare stocks are shares in companies such as drugmakers and medical device manufacturers. Their prospects can depend on government decisions about areas such as healthcare spending, regulation and the prices patients or public programmes pay for medicines.
Congress has two chambers, the House of Representatives and the Senate, and its balance of power can affect which laws advance. When different parties control Congress and the presidency, political gridlock can make major policy changes harder, leaving companies and investors to weigh how rules and spending might develop.
The sector includes businesses with different products and financial prospects, so their share prices do not always move together. Investors may compare healthcare companies with firms in other industries, including technology, when deciding where they see value.
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