Eli Lilly Results Drive Broad Gains Across Health Care Sector

In the Health Care Select Sector SPDR Fund, an exchange-traded fund that trades under the ticker XLV, 51.8% of the graded weight sits in companies graded A or B. Market breadth across the sector was positive on Thursday, October 29, as 91.4% of the sector's S&P 500 members rose. The cap-weighted sector closed +2.6%, outpacing its equal-weighted counterpart at +1.5% because the largest companies provided the heaviest push. Eli Lilly and Company drove the advance, ending +6.6% after the drugmaker beat third-quarter revenue expectations and raised full-year sales guidance. Strong demand for obesity treatments Mounjaro and Zepbound reinforced investor confidence in Lilly's market lead and pushed the shares to a fresh record.

Other large holdings contributed to the day's strength, including Gilead Sciences Inc, which closed +4.0%. On the other side of the sector, Baxter International Inc was the session's steepest decliner, finishing -7.8%. Our sources show no reported driver for the decline in Baxter shares. Elsewhere in healthcare, companies reported individual legal and clinical developments. CVS Health filed a lawsuit against the federal government over 2027 Medicare Advantage quality star ratings to avert an estimated $2 billion revenue hit. Meanwhile, Biogen scheduled presentations of updated clinical trial data across its Alzheimer's disease portfolio at an upcoming conference.

While Thursday's gains reached nearly every corner of the sector, the gap between the cap-weighted sector and its equal-weighted counterpart highlighted how heavily the fund relies on its largest members during major rallies. When a large constituent delivers an outsized earnings beat, it can lift the entire group far beyond the pace of the median stock.

The exchange-traded fund settled Thursday +2.4% at $184.06. That session added to a steady climb that has brought the fund to +27.8% over the past twelve months. The sector's advance also came during a session where 8 of the 11 sectors rose, leaving healthcare among the market's primary leaders on the day.