Some large banks have improved their U.S. economic outlooks, with Goldman Sachs cutting the chance of a recession within the next 12 months to 25% from 35%. The Commerce Department, meanwhile, increased its estimate for first-quarter Gross Domestic Product growth to an 2% annualized rate from its initial 1.3% estimate.
"But until we hear from companies that they are cutting their labor force, then we think that we will not have a dire earnings season and some of these lagging sectors will become more favorable," she said. That will likely continue to weigh on stocks overall as borrowing costs increase. Overall, earnings in the S&P 500 are expected to fall 5.7% in the second quarter, largely due to declining margins, Refintiv data showed.
The healthcare sector trades at a forward price-to-earnings ratio of 17.6, well below the 20.1 ratio of the broad S&P 500.