Healthcare Stocks Fall as Market Rout Spreads
Seven Lights
Healthcare shares fell Thursday as a sell-off in artificial-intelligence and semiconductor stocks swept Wall Street and spread to Asian and European markets, extending a repricing of the AI trade after the midterms.
The State Street Health Care Select ETF, XLV, jumped 3 per cent the day after Election Day, then fell with Thursday’s rout. Jared Holz, who covers healthcare for Mizuho, told CNBC’s “Fast Money” that the outlook is uncertain because of likely gridlock in the new Congress. “The next couple of years I really can’t see too much happening,” he said.
“Pharma is trading more expensive than tech for the first time in 20 years. So, I backed away from pharma. I would look at medtech,” Mr. Holz said. He said healthcare could perform well if a Democrat wins the White House in 2028 and rolls back the Trump-era strategies, provided the party holds Congress.
Semiconductors led the Thursday fall. The PHLX Semiconductor Index dropped 12.25 per cent to 9,011.14, its biggest one-day decline since March 2020. Advanced Micro Devices fell 17.3 per cent and Nvidia 9.3 per cent, leaving Nvidia up 2.6 per cent for 2026. Micron Technology declined 17.46 per cent to $656.39 and Lam Research 16.36 per cent to $185.20.
The iShares Semiconductor ETF closed down 12.15 per cent at $131.90 and the VanEck Semiconductor ETF down 11.21 per cent at $447.73, for weekly losses of about 23 and 20 per cent. Qualcomm fell 9.5 per cent after fourth-quarter smartphone chip sales missed Wall Street expectations. Arm Holdings sank about 13 per cent, Intel about 10 per cent and SanDisk 22 per cent, after a 7 per cent drop the prior session.
Behind the retreat were doubts that AI construction can keep its pace. UBS analysts estimated potential construction pauses could put about 30 per cent of expected United States data-centre capacity additions for 2028 at risk. Democrats won control of both houses of Congress and key races in states that host data centres.
Markets steadied on Friday. The Nasdaq Composite closed up 1.1 per cent, partly reversing its 5.5 per cent fall of Thursday; the S&P 500 closed up 0.3 per cent and the Dow Jones Industrial Average ended down 0.4 per cent. An unexpectedly strong 165,000 jobs added in September supported prices. Abroad, the Kospi closed down 6 per cent, chipmaker SK Hynix plunged more than 10 per cent, and Britain’s FTSE 100 declined 1.01 per cent after the Bank of England raised rates and signalled another rise could follow.
President Trump on Friday repeated support for “super intelligence,” saying only “foolish leadership” would “say no to the riches they bring.” Investors are watching how the new Congress treats AI and data-centre regulation.