Health Care Holds Flat as Hospital Slump Counters Biotech Gains

On Tuesday, October 27, Health Care Select Sector SPDR Fund (XLV), an exchange-traded fund tracking the sector, closed -0.1% at $179.19, while cap-weighted Health Care ended 0.0%. Inside the group, 51.4% of the fund's graded weight sits in companies graded A or B, but market breadth was narrow, as only 40.0% of the sector's S&P 500 members managed to gain. The equal-weighted sector finished at -0.3%, with Moderna Inc closing +4.6% while Universal Health Services Inc ended at -4.5%. The underlying drag stemmed from hospital operators after an earnings report from HCA Healthcare warned of an approximately $400 million pretax hit from rising uninsured patient volumes.

Hospital Pressure and Payer Friction

The sharpest headwinds centered on healthcare facilities and hospital chains. Universal Health Services Inc closed -4.5%, marking the steepest decline among the sector's S&P 500 components. Investors reacted to third-quarter disclosures from HCA Healthcare, which forecast 2027 earnings to remain roughly flat with 2026 due to reduced Medicaid supplemental payments. The cautious outlook prompted broader selling across hospital operators facing similar operational and payer-mix headwinds.

Biotechnology and Pipeline Support

Pharmaceutical and biotechnology firms counterbalanced the hospital slump:

• Moderna Inc closed +4.6%, while Illumina Inc finished at +3.1%, though our sources show no reported driver for either move.
• Regeneron Pharmaceuticals secured a renewed $270 million supply agreement with the federal government for its Ebola antibody therapy Inmazeb.
• AbbVie submitted a biologics license application to the Food and Drug Administration for etentamig, an investigational treatment for relapsed or refractory multiple myeloma.
• Gilead Sciences finalized terms to expand public reimbursement for its primary biliary cholangitis treatment in Canada.

Fund Balance and Quality Profile

The fund carries an annual expense ratio of 0.08%, with companies graded A or B accounting for 51.4% of its graded assets. Across EasyAlpha's grading, companies graded A or B have stronger fundamentals, and historically they have carried a lower risk of large drawdowns than companies graded D or E.