Healthcare stocks have taken the leadership baton in recent weeks as money rotates toward defensives with steady earnings power. With the Health Care Select Sector SPDR Fund
$XLV
State Street Health Care Select Sector SPDR ETF
$159.54
climbing and ownership broadening, the market is starting to treat healthcare as a relative-strength pocket rather than a hiding place. July’s earnings and clinical windows now become the proof point for whether that leadership phase sticks.
Fund flows and price action matter because they often precede fundamentals. The combination of renewed creations in the sector exchange-traded fund, improving breadth across managed care and biotech, and a dense calendar of company updates gives investors clean markers to track whether leadership can persist into the third quarter.
Flows and leadership in XLV
The State Street Health Care Select Sector SPDR ETF (
$XLV
State Street Health Care Select Sector SPDR ETF
$159.54
) remains a clean one-ticket lens on the group. According to State Street’s fund page, 254.67 million shares were outstanding on June 29, and assets stood around $41 billion, signaling renewed demand. Recent market data show
$XLV
State Street Health Care Select Sector SPDR ETF
$159.54
up roughly 8% over one month and about 17% over the last year.
The portfolio is concentrated at the top, which helps explain why large-cap catalysts can move the whole tape. State Street lists Eli Lilly and Company (
$LLY
Eli Lilly and Company
$1,191.71
) as the largest weight, followed by Johnson & Johnson (
$JNJ
Johnson & Johnson
$253.98
), AbbVie, UnitedHealth Group (
$UNH
UnitedHealth Group Incorporated
$426.54
), and Merck. By industry, the fund allocates about 38% to pharmaceuticals, 19% to healthcare providers and services, 18% to biotechnology, and 16% to equipment and supplies. That mix means earnings from big pharma and managed care can quickly shape sector sentiment.
Breadth across plans and biotech
Breadth has improved beyond one subgroup. Managed-care momentum is notable: UnitedHealth Group (
$UNH
UnitedHealth Group Incorporated
$426.54
) has gained about 56% over three months and roughly 12% over one month in recent figures, reflecting a sharp sentiment reset after a difficult first quarter. That matters because plans are a top-five XLV holding and a read-through on utilization and cost trends. The managed-care angle and reimbursement sensitivity were the core of our prior analysis in managed care rally faces July tests.
On the innovation side, Eli Lilly (
$LLY
Eli Lilly and Company
$1,191.71
) is still doing heavy lifting for pharma growth narratives, up about 54% over the past year on the back of metabolic and oncology franchises. Biotechnology also remains a meaningful slice of the sector ETF and a source of idiosyncratic catalysts, a theme we explored in Biotech Breadth Builds, Catalysts Will Decide. Devices are more mixed. Abbott Laboratories (
$ABT
Abbott Laboratories
$92.16
) has lagged, with shares down roughly 10% over three months and about 26% year to date, a reminder that procedure volumes, pricing, and product-cycle timing still matter to this leadership narrative.
July earnings are the test
The calendar is dense, and the dates are set. Johnson & Johnson (
$JNJ
Johnson & Johnson
$253.98
) holds its second-quarter earnings call on July 15. UnitedHealth Group (
$UNH
UnitedHealth Group Incorporated
$426.54
) reports the morning of July 16, and Abbott Laboratories (
$ABT
Abbott Laboratories
$92.16
) follows later that morning. Large-cap pharma and managed care will set the tone on demand, utilization, and any 2026 guidance changes.
Investors will also be watching Food and Drug Administration decisions and company press releases for July data readouts and regulatory actions, which can swing sentiment in biotechnology and spill over into broader healthcare positioning.
Where the case can break
Healthcare leadership is never stress-free. Policy headlines or reimbursement resets can change earnings power quickly, particularly for managed care. In biotechnology, binary clinical outcomes can add sharp downside volatility. Strong sector exchange-traded fund creations can also reverse if July guidance disappoints or if utilization commentary points to higher costs for plans.
Signals that confirm leadership from here
Three things matter from here. First, flows: continued growth in
$XLV
State Street Health Care Select Sector SPDR ETF
$159.54
shares outstanding or steady assets would support the leadership stance. Second, breadth: leadership that includes plans, biotech, and select devices is healthier than a narrow, mega-cap-only move. Third, guidance and tone: updates from
$UNH
UnitedHealth Group Incorporated
$426.54
,
$JNJ
Johnson & Johnson
$253.98
, and
$ABT
Abbott Laboratories
$92.16
, plus any July regulatory decisions, will tell investors whether fundamentals are lining up with the price action.
