Who's afraid of a small Federal Reserve interest rate hike in December?
Not investors in hospital and physician-staffing stocks.
Healthcare providers posted solid gains Thursday after Federal Reserve Chair Janet Yellen assured markets that she would continue to go slow on interest-rate hikes and that she planned to stay at the helm of the money-policy board through the end of her term in January 2018.
President-elect Donald Trump has been critical of Yellen, arguing that ultra-low interest rates have starved some savers while inflating equity markets with easy borrowings for big investors.
In telling lawmakers Thursday that Trump's election would not knock the Fed off course, Yellen signaled that a small interest rate hike was still on for December. Federal Reserve rates are at historic low levels of 0.25% to 0.50%, so a quarter-point increase would do little, if anything, to deter prospective borrowing.
The beaten-up healthcare sector rose on the news at an even faster clip than the S&P 500. The benchmark index gained less than 1%.
Tenet Healthcare Corp. was up 82 cents, or 5%, to $17.25 Thursday. The Dallas-based hospital chain tumbled after Trump's surprise election Nov. 8, on fears that the hospital company and other providers would be hurt if Trump makes good on his vow to repeal and replace the Affordable Care Act.
LifePoint Health posted a gain of $1.35, or 2.4%, to $57.30. Before election results were in, LifePoint closed Nov. 8 at $61.05.
Physician-staffing giant AmSurg, which is closing in on a merger with Envision Healthcare, rallied 2% Thursday, while HCA Holdings was up 1.5% and Universal Health Services was up 3%.