Analysis: Healthcare stocks perform poorly during inflation spikes

Editor's Note

According to an analysis by Derek Horstmeyer, PhD, finance professor at George Mason University in Fairfax, Virginia, healthcare stocks generally see the “worst median annualized returns during inflation spikes,” Becker’s Hospital CFO Report June 8 reports.

Horstmeyer’s analysis, first published in the Wall Street Journal on June 5, gathered data for all stocks listed on the New York Stock Exchange and the NASDAQ over the last 50 years and studied the three periods when the inflation rate doubled in less than 24 months: March 1973 to May 1975, April 1978 to September 1980, and February 2021 to March 2022.

During those three periods of higher inflation, healthcare stocks performed the worst. Here’s how the median annualized return for healthcare compared to other industries that also saw negative returns:

• Healthcare: -8.44%
• Consumer staples: -6.73%
• Consumer discretionary: -5.71%
• Utilities: -4%
• Technology: -3.64%

According to Horstmeyer, the negative results for the healthcare, technology, and consumer discretionary industries “are understandable” because they are “interest-rate-sensitive,” Becker’s noted.