FILE PHOTO: American flags are displayed on screens on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., September 22, 2025. REUTERS/Jeenah Moon/File Photo

By Puyaan Singh and Sneha S K

(Reuters) -U.S. medtech stocks fell on Thursday after the U.S. Commerce Department opened a probe into imports of medical devices, pressuring shares across the sector.

Analysts said the investigation may weigh on companies with globally sourced supply chains and create a modest overhang for the stocks.

Companies like GE HealthCare, Becton Dickinson, Stryker, Insulet, Intuitive Surgical and ResMed were among the worst performers on the S&P Health Care Equipment index, down between 4% and 11%.

Abbott slipped 1.6% and Medtronic fell 2.3%, while the S&P Health Care Equipment index dropped 2% on the day.

Medtech shares have been volatile this year amid supply chain disruptions, cost inflation and softer demand in some international markets.

The medtech index has seen a modest 2.3% rise this year versus a 12.5% rise in the broader S&P 500 index.

Needham analyst Mike Matson said the probe "creates a new overhang for the already-beleaguered sector, but the actual impact of any new tariffs depends on companies' ability to pass through the costs to customers."

Earlier this month, the Secretary of Commerce launched a Section 232 investigation under the Trade Expansion Act of 1962 to assess how imports of personal protective equipment, medical consumables, and medical devices impact national security. The department said it would make recommendations within 270 days.

"We look forward to continuing our work with the Administration...to strengthen our already-robust and uniquely American industry," said CEO Scott Whitaker of medtech association AdvaMed.

Section 232 allows the President to restrict imports if they are found to "threaten to impair" U.S. national security.

While the list of products covered is broad, "we don't think it's right to hit the panic button", J.P. Morgan analyst Robbie Marcus said in a note.

Shares in healthcare and industrial sectors across Europe also dipped.

(Reporting by Puyaan Singh, Sneha S K, Mrinalika Roy in Bengaluru; Editing by Tasim Zahid)