Healthcare stocks have traditionally been viewed as a safe play amid volatility in the markets. That's been changing, thanks to President Trump's tariffs and reductions in spending on research.

"Historically, the sector has been the strongest performer in late cycle and recessionary periods, suggesting this may be an area investors should look into amid uncertainty over the broader macroeconomic outlook," a BlackRock strategist wrote.

Welcome to the first 100 days of the Trump administration.

In the recent past, waning investor interest has been a key headwind. But President Trump is injecting a new level of uncertainty for investors, making the broader health sector, including both smaller and large-cap healthcare stocks, less appealing.

One recent example is Medpace (MEDP), a small clinical research organization firm, which helps biotechs conduct clinical trials. After it reported slower business in its first quarter earnings release Monday, the company's stock sank more than 10%. Truist analyst Jailendra Singh told Yahoo Finance that Medpace's business is more heavily weighted towards biotechs than its competitors. That means any impact on biotechs, such as funding cuts, will impact the company.

The company regained its losses, but the uncertainty surrounding events in Washington still weighs on Medpace and its peers.

"The impact this year, for 2025, has been the vast uncertainty created [by] both the FDA and HHS broadly, because of what appears to be a fairly significant rethink of how these organizations are run," Leerink Partners analyst Michael Cherny told Yahoo Finance.

"I don't know how to rank order all of these factors. I don't know how to think through, for each of them, when the normalization level comes." Cherney said, referring to funding cuts, tariffs, and waning investor interest.

Not an investing market

The healthcare industry recently boasted $17 billion in equity offerings, dominated the IPO market, and had an enviable deal volume going all the way back to the pre-pandemic days. But it is now struggling as near-term uncertainty rises.

Biotechs are often more responsive to volatility, while large caps can weather the storm. But the pain in the sector is coming from the fact that several headwinds are pressuring both subsectors at the same time, according to Truist's Singh.

Bank of America Securities analyst Tim Anderson said that it's been more than a decade since healthcare was really considered safe, but it is still a defensive play.

"It still acts defensively. You don't have to look any further back than [a few] months ago when the markets were starting to melt down and there was this kind of flood of money coming into pharma. But then Trump starts talking about drug pricing and tariffs on pharma, and that kind of reminded us ... it's not the safe sector that it used to be," Anderson told Yahoo Finance.

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Side view of one asia female pharmacist using digital tablet while taking inventory at pharmacy warehouse.·zorazhuang via Getty Images

But it is a sector worth the long-term hold, according to several experts.

Or, as one JPMorgan strategist wrote in January, "[For] investors looking to rebalance mega-cap tech exposure, the defensive properties and long-term growth potential of the healthcare sector warrant a closer look."

Similarly, in a note to clients last week, Mizuho healthcare sector expert Jared Holz said even some of the weaker healthcare stocks could have long-term opportunity — eventually.

"Stocks are getting cheap for sure, but we think they deserve to trade closer to multi-year lows until the (new headwinds) pose as less problematic. Do not want to miss a massive turn to the upside but believe will get a chance to reverse course, rather than being early which has proven to be costly," Holz wrote.

That's why, he said, the current market volatility means it's not the time to focus on long-term bets.

"This is a trading market. Not an investing market," Holz said.

Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee on social media platforms X, LinkedIn, and Bluesky @AnjKhem.

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