The healthcare sector has been ‘forgotten.’ Here’s why DWS’s Bianco sees a buying opportunity

S&P 500’s Healthcare Sector
SP500EW.35,
-0.52%

has increased by nearly 14% this year, while information technology
SP500EW.45,
-1.50%

has grown by more than 27%, according to FactSet data. Healthcare has also lagged the S&P 500’s gain this year by about 20%.

Bianco said the healthcare sector has “good breadth,” pointing to potential buying opportunities in areas such as managed care, devices, pharmaceuticals and biotechnology. He also said the healthcare sector is a big part of the US economy and is the “next battleground for inflation” amid an aging population.

The capitalization-weighted S&P 500 index is “very digital,” Bianco said, given its high exposure to technology. Information technology represents about 29% of the S&P 500, while tech giant Meta Platforms Inc.
FB,
-4.27%,
formerly known as Facebook and Google’s parent company Alphabet Inc.
GOOG,
-0.59%

is in the media services sector of the index, FactSet data shows.

Bianco, who has warned about being “over-reliant” on the S&P 500 index, said he also likes small-cap stocks. The Russell 2000 Index focuses on small caps
RUT,
-2.34%

down 2.3% on Wednesday, slipping into a correction zone, usually defined as at least 10% off recent highs, for the first time since June 2020, while the S&P 500
SPX,
-1.18%

down 1.2%, FactSet data showed.

NS fourth strong slide for US stock indexes comes amid renewed concerns about the new omicron variant of the coronavirus, as the US has confirm its first case. Nasdaq Composite is full of technology COMP lost 1.8% Wednesday while the Dow Jones Industrial Average DJIA down 1.3%, FactSet data showed.

The US stock market fell after that Tuesday’s drop that went strong after Federal Reserve Chairman Jerome Powell remarked in testimony before the Senate Banking Committee that the Fed would consider increasing the descending speed its monthly bond purchases. He cited “high” inflation pressures and a “very strong” economy.

For 2022, Bianco said it will be another “good year” for the stock market provided the Fed will not need to take “drastic” actions to contain inflation. Many investors had expected the Fed to complete the cut before starting to raise the benchmark lending rate, which has kept between 0% and 0.25% during the pandemic to support the economic recovery. .

Read: Jerome Powell Says He Doesn’t Think Cons Are Going To Break The Market

Bianco believes that banks will benefit from higher exchange rates. The financial sector of the S&P 500, which fell 1.1% on Wednesday, has seen gains this year of about 27%, according to FactSet data, according to FactSet data.

Investors will keep an eye on Fed officials’ rate forecasts after their next policy meeting, scheduled for December 14-15.