Freedom: Industrials and healthcare will expand opportunities beyond Big Tech

Freedom analysts gave a positive outlook for industrials and healthcare for Q4 2026 and highlight them as ways to broaden portfolios beyond the largest technology companies. In industrials, experts point to resilient demand for electrical equipment and energy infrastructure. In healthcare, the case for a rebound is tied to improving insurance margins and a slowdown in growth of hospital staffing costs.

Which companies represent these sectors

The industrial sector includes equipment manufacturers as well as engineering and construction companies. Sector representatives include power management solutions provider Eaton (ETN) and Quanta Services (PWR), which builds and maintains energy infrastructure.

Healthcare encompasses different types of businesses, from drug development to insurance and medical services. Well-known sector representatives include pharmaceutical companies Eli Lilly (LLY) and Johnson & Johnson (JNJ), the insurance and healthcare group UnitedHealth Group (UNH), as well as hospital operator HCA Healthcare (HCA). These examples clarify the sector’s makeup; there are no individual recommendations on them in the current review.

Electrical equipment and infrastructure support industrials

Within industrials, Freedom Broker highlights electrical equipment manufacturers and companies that build energy and engineering infrastructure. Demand for their capacity remains in place, and these areas are what experts view as an opportunity to expand portfolios. Their positive view is based on resilient demand and improving expectations for financial results.

At the same time, analysts are keeping the technology core of the portfolio. For Q4, their view on technology and communication services remains neutral-to-positive, while industrials and healthcare are more positive. Allocations to other sectors should complement positions in the largest technology companies.

Healthcare could benefit from slower cost growth

In healthcare, experts see two reasons for a rebound. The first is improving insurance margins—that is, the relationship between insurers’ revenues and their costs of paying for medical services. The second is a slowdown in growth of hospitals’ personnel costs.

For the insurance business, this means an opportunity to improve profitability with a more favorable ratio of premiums collected to claims paid. For medical providers, it means easing pressure from one of the largest expense items.

However, the recovery in prices has not yet become устойчивым. In the week ahead of the review’s publication, the Health Care Select Sector SPDR Fund (XLV), which represents the U.S. healthcare sector, fell 2.65%. Freedom Broker’s positive assessment applies to the sector’s outlook in Q4.

Stabilization of yields is important for a broad-based advance

One condition for a market recovery, analysts say, is stabilization in bond yields. A softening in expectations for the Federal Reserve’s next decision has not yet resulted in lower long-term financing costs.

According to Freedom Broker, a decline in the S&P 500 to 7,600 could create an opportunity for phased buying if yields stabilize. A simultaneous rise in oil prices, yields, and credit spreads—risk premiums on corporate debt—would weaken this scenario.

To confirm a broader recovery, experts want to see several sessions of sustained demand for stocks across different sectors. A one-day spike in отдельных companies would be less convincing. Freedom Broker’s overall view of U.S. stocks remains neutral-to-positive for Q4 and positive for 2027.

Freedom previously increased allocations to healthcare

In mid-June, Freedom Broker analysts had already highlighted healthcare thanks to positive investor positioning, relatively low option costs, and a resilient market impulse. The experts then increased the sector’s weight in the model portfolio of the absolute-return strategy. The core holding was the XLV fund; Eli Lilly shares were also added to the portfolio.

In late June, Freedom Broker noted the resilience of the industrial sector amid pressure on technology companies. Analysts linked support for industrials to demand and expectations of higher capital spending on infrastructure projects.

Not an individual investment recommendation.