Healthcare ETFs Sink On Johnson & Johnson News, ACA Ruling: What's Ahead?

Healthcare, the best performing sector year to date, took a hit recently on Johnson & Johnson (JNJ - Free Report) news and a federal judge ruling. The world's biggest maker of health care products Johnson & Johnson had a tumultuous ride last week on reports that its baby powder contained cancer-causing asbestos.

Additionally, a federal judge in Texas ruled that President Barack Obama's signature health law — the Affordable Care Act (ACA) or Obamacare — is unconstitutional. U.S. District Court Judge Reed O'Connor of Texas declared that the key portions of the ACA were inconsistent with the U.S. Constitution. The ruling argued that the health-care law cannot stand on its own since Congress last December repealed the individual mandate, which imposed a tax penalty on consumers who went uninsured.

The ruling has sent the hospital and health insurer stocks into a tailspin. Community Health Systems , Molina Healthcare (MOH), Tenet Healthcare (THC - Free Report) , Centene Corporation (CNC - Free Report) , HCA Healthcare (HCA - Free Report) and UnitedHealth (UNH - Free Report) shed 13.5%, 8.9%, 6.8%, 4.8%, 2.8%, and 2.6% respectively.

ETF Impact

The rough trading also spread into the ETF world. Invesco DWA Healthcare Momentum ETF (PTH - Free Report) Invesco S&P SmallCap Health Care ETF (PSCH - Free Report) Virtus LifeSci Biotech Clinical Trials ETF (BBC - Free Report) and SPDR S&P Health Care Services ETF (XHS - Free Report) stole the show, losing at least 3.5% on Dec 17.


This fund follows the DWA Healthcare Technical Leaders Index and holds a basket of 46 U.S. companies. The product has AUM of $228.6 million and trades in lower volume of 34,000 shares. Expense ratio came in at 0.60%. Healthcare equipment and supplies take the largest share at 35.9% while biotechnology and healthcare providers and services round off the next two with double-digit exposure each.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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