Healthcare stocks have outperformed tech by 35.6 percentage points over the past six months, their widest lead in 25 years, as investors moved money out of AI stocks. Healthcare gained 31.7% while tech fell 3.9%, according to BeInCrypto, reversing an early-June lead of 45.6 points for tech, The Kobeissi Letter said. The shift took hold in late spring as confidence in the AI trade weakened: from the end of April to October 26, the S&P 500 Healthcare Index rose about 23%, led by Eli Lilly, AbbVie and Johnson & Johnson, while Goldman Sachs steered AI-wary investors toward healthcare in October. Morningstar’s US technology index fell 6.62% in October as its healthcare index gained 8.82%; on November 5, the Nasdaq dropped 5.52% amid fears of a data-center slowdown. Healthcare insurers and hospital operators had also rallied after Democrats won control of Congress. The only wider healthcare lead came after the dot-com bubble burst, peaking at 48.5 points, versus 22.9 in the 2008 financial crisis and 21.2 in the 2022 bear market. US tech and communication stocks lost nearly 80% from March 2000 to September 2002, while the rest of the market fell 22%, though MSCI said today’s tech leaders are profitable and have strong margins. Potential challenges to healthcare’s lead include its status as Morningstar’s third most overvalued US sector, disappointing October results from Johnson & Johnson and a 2.5% tech-sector rebound on November 9, when all S&P 500 sectors rose. In October, the cap-weighted S&P 500 fell 0.9%, while its equal-weight version gained 5%, underscoring the impact on holders of tech-heavy index funds.
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