This monthly article aims at a top-down analysis of the healthcare sector based on value, quality, and momentum metrics. It may also help analyze sector ETFs such as the Health Care Select Sector SPDR ETF ( XLV ), whose holdings haveFred Piard, PhD. is a quantitative analyst and IT professional with over 30 years of experience working in technology. He is the author of three books and has been investing in data-driven systematic strategies since 2010. Fred runs the investing group Quantitative Risk & Value ...

This monthly article aims at a top-down analysis of the healthcare sector based on value, quality, and momentum metrics. It may also help analyze sector ETFs such as the Health Care Select Sector SPDR ETF ( XLV ), whose holdings haveFred Piard, PhD. is a quantitative analyst and IT professional with over 30 years of experience working in technology. He is the author of three books and has been investing in data-driven systematic strategies since 2010. Fred runs the investing group Quantitative Risk & Value ...

Group 1: Market Signals and Sector Performance - The current AI-driven tech rally is attracting general investors, while "smart money" is shifting towards defensive sectors like Energy and Healthcare, indicating a potential late-cycle economic warning [2][3] - The Energy Select Sector SPDR ETF (XLE) and the Health Care Select Sector SPDR ETF (XLV) have increased by 6.4% and 12.3% respectively since September 2025, outperforming the S&P 500's 4.18% gain [3] - Individual stocks in these sectors have shown significant gains, with Johnson & Johnson (JNJ) up 17% and Halliburton (HAL) up 32%, while the Technology Select Sector SPDR ETF (XLK) has only returned 4.41% [3] Group 2: Economic Indicators - The U.S. GDP appears strong, with a reported increase of 4.3% in Q3 and an estimated 5.3% for Q4, but underlying issues suggest a weakening economy [4] - The unemployment rate has risen to 4.4% from 4% in January 2025, with layoffs surging to 1.2 million last year, marking a 58% increase from 2024 [5] - Inflation remains a concern, with the Consumer Price Index indicating a December inflation rate of 2.7%, up from 2.3% in April, driven by rising tariffs [7]

Economic Overview - The U.S. economy added 50,000 jobs in December 2025, lower than the revised 56,000 in November and below the Dow Jones estimate of 73,000, while the unemployment rate dropped to 4.4%, better than the forecast of 4.5% [1] Wage Growth - Average hourly earnings increased by 0.3% sequentially, aligning with forecasts, while the annual increase of 3.8% exceeded expectations by 0.2 percentage points [2] Sector Performance Healthcare - Healthcare employment rose by 21,000 jobs in December, with hospital employment increasing by 16,000. The sector averaged 34,000 jobs added per month in 2025, slower than the 56,000 average in 2024 [3] - The Health Care Select Sector SPDR ETF (XLV), with 30% exposure to the pharma industry and significant allocations to healthcare providers, equipment, biotech, and life sciences, is positioned to benefit from this moderate momentum [4] - HCA Healthcare (HCA), ranked 3 (Hold), is the largest non-governmental operator of acute care hospitals in the U.S., with a trailing four-quarter earnings surprise of 12.42% on average [5] Food Services & Drinking Places - Employment in food services and drinking places added 27,000 jobs in December, with an average monthly gain of 12,000 jobs in 2025, consistent with the previous year's performance [6] - The AdvisorShares Restaurant ETF (EATZ) is a potential investment opportunity, with Restaurant Brands International (QSR), ranked 2 (Buy), being a notable stock pick in this sector [6] Retail Trade - Retail trade experienced a net loss of 25,000 jobs, with 5,000 jobs gained in electronics and appliance retailing offset by losses in warehouse clubs, supercenters, and food and beverage retailers [7] - Target (TGT), ranked 3, offers a diverse range of products and has about 5% exposure to the Invesco S&P Ultra Dividend Revenue ETF (RDIV) [8] Summary of Sector Trends - Healthcare jobs are steadily increasing, keeping XLV in focus amid moderate sector momentum [9] - Food services hiring remains resilient, supporting investment opportunities in EATZ and QSR [9] - Retail sector faces job losses despite gains in electronics, creating selective pressure on stocks like TGT [9]

Core Insights - The article provides a comprehensive analysis of the healthcare sector, focusing on metrics related to value, quality, and momentum, which can aid in evaluating sector ETFs like the Health Care Select Sector SPDR ETF (XLV) [1] Group 1: Sector Analysis - The healthcare sector is analyzed through a top-down approach, emphasizing the importance of value, quality, and momentum metrics [1] - The analysis may assist investors in making informed decisions regarding healthcare sector ETFs [1] Group 2: Analyst Background - The article features insights from Fred Piard, PhD, a quantitative analyst with over 30 years of experience in technology and investing in data-driven strategies since 2010 [1] - Fred Piard runs the investing group Quantitative Risk & Value, focusing on quality dividend stocks and innovative tech companies [1]

Core Insights - The Health Care Select Sector SPDR ETF (XLV) achieved a notable 9.29% gain over the past month, including dividends, making it the best-performing sector ETF [1] Performance Summary - XLV is now close to catching up with the Technology sector in terms of performance [1] Analyst Background - The Sunday Investor specializes in U.S. Equity ETFs and has a strong analytical background, holding a Certificate of Advanced Investment Advice from the Canadian Securities Institute [1] - The Sunday Investor has developed a proprietary ETF Rankings system that evaluates nearly 1,000 ETFs based on various factors, resulting in a composite score from 1-10 [1]

Group 1 - Nvidia's influence is driving futures higher, with health care stocks taking a leadership role in the S&P 500, although this may be temporary [1] - The Health Care Select Sector SPDR ETF (XLV), the largest health care ETF, has seen a 5.4% increase this month through November 19, with total assets of $39.3 billion [1] - Health care is currently the top-performing sector among the 11 sectors in the S&P 500 [1] Group 2 - The AI stock bubble is deflating, resulting in significant losses for some S&P 500 stocks, with analysts warning of further declines [2][4] - The bursting of the AI stock bubble has led to a total loss of $2.2 trillion in value across the market [4] - 13 S&P 500 stocks have slipped into a bear market as a consequence of the AI bust, which has wiped out $1.1 trillion in stock value [4]

Group 1: Government Shutdown and Economic Impact - The Senate has passed a bipartisan agreement to potentially end the U.S. government shutdown, indicating a resolution may be near [1] - The shutdown has incurred significant costs, with the travel sector losing approximately $1 billion per week, increasing pressure for a compromise [4] - The lack of critical economic data due to the shutdown creates uncertainty for the Federal Reserve and businesses, adding urgency to resolve the situation [5] - Industry groups are pushing for a restoration of government functions before economic damage becomes irreversible [6] Group 2: Investment Opportunities in ETFs - The final days of a government shutdown often present unique investment opportunities, as markets anticipate resolutions and begin pricing in a return to normalcy [2] - Investing in top-tier ETFs is recommended over individual stocks, as ETFs provide diversification and mitigate risks associated with single stock performance [9] - The following ETFs are highlighted as balanced ways to re-engage with equities during the market transition [10] Group 3: ETF Details - **Health Care Select Sector SPDR ETF (XLV)**: AUM of $36.86 billion, exposure to 60 companies, year-to-date gain of 7.7%, fees of 8 bps, Zacks ETF Rank 1 [11][12] - **Technology Select Sector SPDR ETF (XLK)**: AUM of $92.93 billion, exposure to 69 companies, year-to-date surge of 24.5%, fees of 8 bps, Zacks ETF Rank 1 [13][14] - **SPDR S&P 500 ETF (SPY)**: AUM of $693.69 billion, exposure to 503 large-cap U.S. companies, year-to-date increase of 15.5%, fees of 9 bps, Zacks ETF Rank 2 [15]

Core Insights - The Fidelity MSCI Health Care Index ETF (FHLC) is a passively managed ETF launched on October 21, 2013, providing broad exposure to the Healthcare - Broad segment of the equity market [1] - FHLC has amassed over $2.59 billion in assets, making it one of the larger ETFs in its sector [3] - The ETF has an annual operating expense ratio of 0.08%, making it one of the least expensive options available [4] Index Details - FHLC aims to match the performance of the MSCI USA IMI Health Care Index, which represents the U.S. healthcare sector [3] - The ETF is fully allocated to the healthcare sector, providing diversified exposure [5] Holdings and Performance - Eli Lilly + Co Common Stock (LLY) constitutes about 11% of total assets, with the top 10 holdings accounting for approximately 48.94% of total assets [6] - Year-to-date, FHLC has gained about 7.7%, with a 12-month increase of approximately 0.75% as of November 4, 2025 [7] - The ETF has a beta of 0.67 and a standard deviation of 13.55% over the trailing three-year period, indicating medium risk [7] Alternatives - FHLC carries a Zacks ETF Rank of 3 (Hold), suggesting it is a sufficient option for investors seeking exposure to healthcare ETFs [8] - Other alternatives include the Vanguard Health Care ETF (VHT) and the Health Care Select Sector SPDR ETF (XLV), with VHT having $15.91 billion in assets and XLV having $36.52 billion [9]

Economic Overview - U.S. consumer prices increased by 0.3% in September 2025, slightly down from August's 0.4% gain and below the expected 0.4% growth [1] - Energy costs rose by 1.5%, driven by a 4.1% increase in gasoline prices, while food prices saw a 0.2% increase [1] - The core consumer price index, excluding food and energy, gained 0.2%, just below August's rate and slightly under the forecast of 0.3% growth [1] - The annual consumer price index recorded a rise of 3%, which was less than economists' expectations [1] Sector ETFs & Stocks to Gain Energy Sector - The VanEck Oil Services ETF (OIH) is highlighted as a potential investment, with revenues tied to energy prices, a significant component of inflation indices [3] - Monthly inflation for energy was 1.5% in September, with annual inflation at 2.8% [3] - Murphy USA (MUSA), a leading independent retailer of motor fuel and convenience merchandise, is noted as a good investment opportunity with a Zacks Rank of 3 (Hold) [4] Restaurant Sector - The AdvisorShares Restaurant ETF (EATZ) is actively managed and invests at least 80% of its net assets in companies deriving at least 50% of their revenues from the restaurant business [6] - The food-away-from-home index rose by 0.1% in September, with limited-service meals increasing by 0.2% and full-service meals remaining unchanged [5] - Red Robin Gourmet Burgers (RRGB), a full-service casual dining restaurant chain, is identified as a strong buy with a Zacks Rank of 1 [6] Healthcare Sector - The Health Care Select Sector SPDR ETF (XLV) includes companies from various healthcare industries and is based on the Health Care Select Sector Index [7] - The index for medical care services rose by 3.9% annually and 0.3% sequentially in September [7] - Universal Health Services (UHS), which operates acute care hospitals and other healthcare facilities, is mentioned as a buy with a Zacks Rank of 2 [8] Transportation Sector - The SPDR S&P Transportation ETF (XTN) tracks the S&P Transportation Select Industry Index and has a Zacks ETF Rank of 3 [9] - The transportation index increased by 0.3% sequentially and 2.5% year over year in September [9] - Delta Air Lines (DAL), a major player in the U.S. aviation market, is highlighted as a buy with a Zacks Rank of 2 [10]