One of the most popular and successful trades of the past 18 months has given way in November to another sector that has, at least momentarily, taken up the baton of leadership on Wall Street.
The health-care sector posted a more than 6% gain in November, while the information technology and communications services sectors, a new entry among the S&P 500’s SPX, +0.82% 11 sectors that includes Facebook Inc. FB, +1.39% performed among the worst among worst during over the past 30 days.
And the outperformance in health care, displacing the so-called FAANGs, including Facebook, Amazon.com Inc. AMZN, +0.99% Apple Inc. AAPL, -0.54% Netlfix Inc. NFLX, -0.91% and Google-parent Alphabet Inc. GOOG, +0.56% GOOGL, +1.38% may not be a one-off, market participants said.
Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research told MarketWatch that health care holds a dual role.
First, the sector has a slightly more defensive nature compared against the other main S&P 500 sectors. The Schwab strategist said that expectations for a slower pace of U.S. economic expansion in the coming years, as the effects of late-2017 corporate tax cuts wane, have contributed to the appetite for heath-care assets.
Secondly, innovation in the field of biotechnology and a longer-lived, but aging, demographic in the U.S. are helping to buttress appetite for health-care shares.
“For the long term, health care has been defensive in a market economy that has been slowing down because you need medicine and health-care products whether or not it is a bull market or a bear market,” Frederick said.
The transition into health-care names comes as the shares of the quintet of FAANG constituents are all down 20% from a recent peak, the usual qualification for a bear market.
Beyond the health-care sector, which gained 6.9% in