Mizuho's Jared Holz Sees Little Near-Term Policy Change for Healthcare

Mizuho healthcare specialist Jared Holz expects congressional gridlock to limit major policy shifts affecting healthcare stocks over the next two years as Democrats prepare to take control of Congress.

“The next couple of years I really can’t see too much happening,” Holz said, pointing to likely gridlock among lawmakers. He described the sector’s outlook as uncertain and said investors should distinguish between its subsectors.

The State Street Health Care Select ETF (XLV) rose 3% the day after Election Day. That move followed a wider market rally that included healthcare stocks’ initial gains after the midterm results. Healthcare shares later fell with the broader market during Thursday’s sell-off, and the fund ended the week nearly unchanged.

The flat weekly finish came after a strong longer-term run. XLV has gained about 32% since President Trump took office in January 2025, beating the S&P 500’s return by nearly 9 percentage points over that period.

Holz said the post-election movement across healthcare was unusual because subsectors that do not typically move together advanced in tandem. He also pointed to a widening valuation contrast: pharmaceutical stocks were trading at higher valuations than technology stocks for the first time in 20 years. Holz said he had pulled back from pharmaceuticals and would look toward medical technology instead.

His view on medical-device stocks near multiyear lows came with a condition. Holz said he did not expect regulations adopted over the past couple of years to be overturned in the near term. If a reversal did happen, he said, some of those medical-device stocks could become more attractive to investors.

Holz identified the 2028 presidential election as a possible policy turning point. A Democratic presidential win could lead to some Trump administration strategies being reversed and help healthcare, he said. That possibility also depends on Democrats retaining control of both the House and Senate.