NEW YORK (Reuters) - Investors are bracing for widespread volatility in healthcare stocks on Friday, when U.S. President Donald Trump is expected to give a highly anticipated speech about controlling prescription drug prices.
The S&P 500 healthcare sector .SPXHC has declined about 1 percent in 2018, underperforming the broader S&P 500 .SPX by more than two percentage points. Investors say concerns about drug pricing regulations have contributed to pressure on group.
Trump’s speech, delayed from earlier in the year, has injected added anxiety. He has addressed the issue of lowering prices in the past, saying as president-elect in January 2017, for example, that drugmakers were “getting away with murder” in what they charge the government for medicines.
“Investors don’t like uncertainty and this speech has created a fair amount of uncertainty,” said Les Funtleyder, healthcare portfolio manager at E Squared Capital Management. “We don’t really know what is necessarily priced in, what level of detriment to all these industries is priced in.”
Healthcare policy speeches by senior government officials in recent weeks also may have changed the thinking of investors.
“The sense is that the proposals could go a little further than what we have seen in the budget and other places,” said Ipsita Smolinski, managing director at healthcare research and consulting firm Capitol Street.
The speech could affect a broad group of stocks in the healthcare sector, which makes up 13.6 percent of the S&P 500.
“The president never shies away from fiery rhetoric, and we expect that in his speech he will finger manufacturers, pharmacy benefit managers (PBMs), insurers, hospitals, and foreign countries as