The health insurance bill signed into law this week should be a net positive for drug stocks and health care ETFs. While the bill does levy about $80 billion in various fees on the major pharmaceutical players over the next several years, it should also stoke sales by expanding drug insurance coverage as an additional 32 million Americans add health insurance.
Medicare changes announced by the Obama administration caused a significant decline in health care stocks. The new approach calls for elimination of private sector participation in medicare plans, effectively eliminating $175 million of revenue for the industry.
The day after we posted Looking for a Bottom? Start with Sectors, the market tested a new 52-week low and sector performance was telling.
With the US equity market recently hitting a new 52-week low, investors are still waiting for the market to bottom out.
Last week’s market correction has lowered stock prices to the point where dividend yields are now at their highest levels in 12 years. Leading S&P 500 components such as Pfizer (PFE), AT&T (T), Dow Chemical (DOW), Nucor (NUE), and Duke Energy (DUK) all ended the week with forward looking dividend yields of over 6.5% and well above their 5 year averages.