Medical Device ETFs Rally Following Republican Success

ETF Trends reported that stocks rallied following the news that the Republicans now have an expanded majority in the US House of Representatives. Among the gainers were “medical device makers and the corresponding exchange traded funds.”

As quoted in the market news:

Shares of the iShares U.S. Medical Devices ETF (NYSEArca: IHI) are up two-thirds of a percent today and earlier hit a new all-time high.

The SPDR S&P Health Care Equipment ETF (NYSEArca: XHE), an equal-weight rival to the cap-weighted IHI, is up 0.7%, extending its one-month rally north of 6%. IHI is up 4.3% over the past month.

Although IHI and XHE are trading higher Wednesday, the moves are occurring on light volume, which could be a sign that investors are not convinced dissolving the Affordable Care Act, previously seen as a catalyst for IHI and XHE, is something the Republicans can really pull off. Some Republican leaders have already noted repealing Obamacare will not even be attempted unless their party can craft a credible alternative.

In the cases of IHI and XHE, Obamacare itself does not necessarily need to be scrapped, but investors in these ETFs and in the stocks held by the funds are likely to have no tolerance for the Republicans not taking action, and doing so soon, on scrapping the punitive tax on medical device makers included in Obamacare.

Click here to read the full ETF Trends report.