The healthcare sector is demonstrating relative strength during this bear market. This is not surprising as health care companies are pretty insulated from changes in economic growth or monetary policy.
So far in 2022, the Health Care Select Sector SPDR Fund (XLV) is down 13% which is nearly half of the S&P 500's decline. Another potential catalyst is weakness in longer-term rates as recession odds keep climbing. Many healthcare companies with strong balance sheets outperform in this environment due to an increase in share buybacks. This is a tax-efficient strategy to increase earnings per share (EPS) and return capital to shareholders.
