Healthcare Stocks Outlook: Year-End Rotation, J&J’s Eczema Setback, and Managed-Care Scrutiny Shape the Setup Before Monday’s Open

NEW YORK, Dec. 27, 2025, 12:57 p.m. ET — Market closed (weekend)

Healthcare stocks are heading into the final trading days of 2025 with a rare mix of “defensive” support and headline-driven volatility—exactly the combination that can matter most when liquidity is thin and investors are rebalancing portfolios into year-end.

U.S. stock markets are shut today, but Friday’s post-Christmas session left a clear message: the broader market is still hovering near record levels, and investors have been widening their focus beyond mega-cap technology—an environment that can favor large-cap healthcare even as biotech remains more catalyst-sensitive. ^[1]

Where healthcare stocks stand after the latest session

Wall Street finished Friday almost unchanged in light volume. The Dow slipped 0.04%, the S&P 500 edged down 0.03%, and the Nasdaq fell 0.09%, according to Reuters. Strategists framed the pause as normal after a strong run, and Ryan Detrick of Carson Group pointed to the “Santa Claus rally” window—late-December into early January—as a period that can still tilt positive. ^[2]

For healthcare investors, the more important takeaway is the rotation backdrop. In Reuters’ “Week Ahead” outlook, market watchers highlighted that non-tech areas—including healthcare—have posted solid gains since early November, as investors look for more moderate valuations and broader participation. ^[3]

That rotation showed up in the big sector ETFs on Friday:

Health Care Select Sector SPDR (XLV) finished at $156.05. ^[4]
SPDR S&P Biotech ETF (XBI) ended at $124.98. ^[5]
iShares Biotechnology ETF (IBB) closed at $171.44. ^[6]

In plain English: large-cap healthcare held up, while biotech slipped—a familiar pattern when investors want exposure to the sector but prefer steadier cash flows over binary trial and FDA risk.

The last 24–48 hours: the headlines moving healthcare stocks

Even with markets closed today, the healthcare tape has been busy. Here are the developments that matter most for sentiment heading into Monday.

1) Johnson & Johnson halts a mid-stage eczema trial

Johnson & Johnson said it discontinued a Phase 2 study of its experimental atopic dermatitis drug JNJ-5939 after the trial failed to meet efficacy goals at an interim analysis. J&J said the drug was well tolerated but didn’t clear the company’s “high-bar” to move forward; it also reiterated it has other atopic dermatitis programs in development. ^[7]

Why investors care: atopic dermatitis is a crowded, high-value market with entrenched competitors—Reuters pointed to leading branded options including Dupixent (Sanofi/RegN) and Rinvoq (AbbVie) among others. When a major player steps back from one program, it can subtly reshape expectations around competitive intensity, pipeline breadth, and where future R&D spending flows. ^[8]

2) New scrutiny on mail-order pharmacies and Medicare “oversupply”

A Wall Street Journal investigation published Saturday found that too-frequent refills left Medicare patients with “extra” medications—an estimated $3 billion in waste between 2021 and 2023, based on the Journal’s analysis of Medicare prescription records. The report highlights mail-order pharmacies (including those tied to large insurers) and raises questions about incentives linked to refill timing and adherence measures. ^[9]

The story also includes a blunt warning from Pamela Schweitzer, described as a pharmacist and former assistant U.S. surgeon general, who said the scale of waste is “awful” and that for seniors it’s “a terrible idea” to have large quantities of medication at home due to safety risks like confusion or accidental overuse. ^[10]

Why investors care: this is the kind of headline that can reignite regulatory and political risk for healthcare conglomerates that combine insurance, PBM, and pharmacy operations. Even without an immediate rule change, policy scrutiny can pressure valuations—especially into a new year when Washington narratives often accelerate.

3) Managed care as a “stock picker’s market”

In single-name action, Centene (CNC) outperformed in Friday’s session, rising 1.55% to close at $40.51, according to MarketWatch, even as the broader tape was flat-to-down. ^[11]

Why investors care: the managed-care group has been trading on a mix of policy expectations, medical-cost trends, and company-specific execution. The takeaway isn’t that one up day changes the story—it’s that health insurance and services names are increasingly diverging, and investors may need to be more selective rather than treating “healthcare” as a single trade.

The broader forces shaping healthcare stocks into the next session

Rate cuts, Fed minutes, and why biotech is still sensitive

Investors are heading into next week focused on the interest-rate path. Reuters notes the Fed has cut rates by 75 basis points over its last three meetings of 2025, taking the policy rate to 3.50%–3.75%, and that minutes from the Fed’s December 9–10 meeting are due Tuesday. ^[12]

For healthcare stocks, rates matter in two different ways:

Biotech and early-stage innovators often behave like long-duration assets—when rates fall, future cash flows are discounted less harshly, and risk appetite can improve.
Large-cap pharma, medtech, and services can benefit from a “soft landing” narrative and rotation, but they’re typically less mechanically tied to the discount-rate story than pre-revenue biotech.

Year-end mechanics: thin liquidity can amplify moves

Reuters repeatedly flagged thin holiday trading and year-end adjustments as a setup where price moves can be exaggerated. That matters for healthcare because the sector contains both:

mega-cap, index-heavy names that move with flows; and
smaller, catalyst-driven names that can gap on a single headline. ^[13]

Deals, vaccines, and a reminder that policy risk is not evenly distributed

Although it falls slightly outside the strict 48-hour window, one of the most consequential healthcare stories of the week remains Sanofi’s agreement to buy Dynavax Technologies for about $2.2 billion, a move aimed at strengthening Sanofi’s adult vaccine portfolio. Reuters reported the deal would add Dynavax’s hepatitis B vaccine Heplisav‑B and an experimental shingles candidate Z-1018, with Sanofi expecting to close in Q1 2026. ^[14]

The strategic rationale is notable because it explicitly intersects with policy uncertainty. Reuters wrote that the deal comes as the U.S. policy environment around vaccines is shifting, and it cited William Blair analyst Matt Phipps, who said the acquisition makes sense given “growing regulatory concerns around vaccines.” Reuters also reported J.P. Morgan analysts suggested Dynavax’s shingles candidate could extend Sanofi revenues beyond 2030 if early data holds up in larger trials. ^[15]

In the same Reuters report, Sanofi disclosed the FDA declined to approve its experimental MS drug tolebrutinib, with Sanofi R&D head Houman Ashrafian saying the decision was a surprise and a “significant” shift from prior feedback. ^[16]

Why healthcare investors should care: this is a clean illustration of how, within “healthcare stocks,” vaccines, specialty pharma, and chronic-disease franchises can carry very different policy and regulatory exposures—and why M&A can quickly become a central narrative when companies want to diversify growth drivers.

What investors should know before the next trading session

Because the market is closed today, the focus shifts to pre-positioning for Monday’s open.

Key timing to watch

The NYSE’s core session runs 9:30 a.m. to 4:00 p.m. ET, with extended trading afterward. ^[17]
Equity index futures typically reopen Sunday evening (commonly cited as 6:00 p.m. ET) and trade into Friday, with daily maintenance breaks. ^[18]

A practical healthcare-stock checklist for Monday

Track the “risk-on/risk-off” signal early: If futures point higher and rates drift lower, biotech and higher-beta healthcare names often catch a bid first; if not, money can stay concentrated in profitable large caps. ^[19]
Watch for follow-through on the J&J eczema headline: Pipeline setbacks don’t always move diversified giants dramatically, but they can shift relative sentiment across the immunology/dermatology complex. ^[20]
Monitor insurer/PBM news flow after the WSJ investigation: If politicians or regulators amplify the mail-order refill story, it could weigh on the managed-care/pharmacy complex even without immediate rule changes. ^[21]
Expect headline sensitivity into year-end: Reuters warned that light volume can make moves look bigger than they “should.” That’s especially true in healthcare, where single-company news can dominate. ^[22]

The next major healthcare catalyst: JPMorgan’s January conference

Looking beyond Monday, healthcare investors are already circling the calendar for the sector’s biggest annual narrative catalyst: J.P. Morgan’s 44th Annual Healthcare Conference, scheduled for January 12–15, 2026 in San Francisco. ^[23]

Historically, this conference can drive a dense cluster of:

corporate updates and guidance refreshes,
partnership announcements, and
early-year deal speculation—particularly in biotech and medtech.

For investors positioning now, that means the late-December tape may be less about sweeping fundamental revisions and more about where money wants exposure before the January information rush.

Bottom line: With the market closed today, healthcare stocks are entering Monday with supportive rotation tailwinds—but also with sharper spotlight risk on pipelines and healthcare middlemen. For investors, the key is to separate broad sector flow (which has favored large-cap healthcare) from the idiosyncratic catalyst risk that still defines biotech and policy-exposed managed-care names. ^[24]