## [# Healthcare ETFs Slide as UnitedHealth Plunges](/sections/news/health-care-etfs-slide-unitedhealth-plunges)
# Healthcare ETFs Slide as UnitedHealth Plunges
\- XLV is sharply underperforming SPY.
\- Healthcare, long seen as a defensive play relatively insulated from economic swings, is starting to look vulnerable.
[](/authors/sumit-roy)
[By Sumit Roy ](/authors/sumit-roy)
May 13, 2025
Edited by: David Tony
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Healthcare stocks plunged on Tuesday, sharply underperforming the broader market as the nation’s largest health insurer tumbled.
The [**Health Care Select Sector SPDR Fund (XLV)**](/xlv) dropped 2.5% by midday, flirting with its lowest level in more than a year and a half. That compares with a 1% gain in the [**SPDR S&P 500 ETF Trust (SPY)**](/spy), highlighting the unusual divergence between healthcare and the broader market.
The catalyst was a stunning 16% drop in shares of [UnitedHealth Group Inc. (UNH)](/stock/unh) after the company’s CEO abruptly resigned for personal reasons. UnitedHealth also withdrew its full-year guidance, citing rising medical costs that are pressuring margins.
It’s the latest blow for the healthcare giant, which has lost 47% of its value since April 11, a dramatic fall for what was a $550 billion company at its peak. As of Tuesday, UnitedHealth was worth $289 billion, still making it the third-largest holding in XLV at 7%, behind only [Eli Lilly & Co. (LLY)](/stock/lly) and [Johnson & Johnson Inc. (JNJ)](/stock/jnj).
But UnitedHealth’s woes aren’t the only headwind facing the healthcare sector.
## XLV Facing Political Pressure
On Monday, President Donald Trump signed an [executive order](https://www.whitehouse.gov/presidential-actions/2025/05/delivering-most-favored-nation-prescription-drug-pricing-to-american-patients/) aimed at lowering drug prices, putting fresh political pressure on pharmaceutical companies. XLV managed to gain 2.5% that day, though it lagged behind SPY’s 3.3% jump.
Healthcare, long seen as a defensive play relatively insulated from economic swings, is starting to look vulnerable. During the market selloff in April, when trade war concerns dragged SPY down by as much as 15% year to date, XLV held up relatively well, falling just over 3%.
But since then, healthcare has lagged sharply. SPY has erased all of its losses and is now up nearly 1% on the year. XLV, by contrast, has failed to recover and is threatening to break to new lows.
[](https://www.etf.com/tools/etf-comparison/XLV-vs-SPY)Healthcare stocks are dealing with a double whammy: policy pressure on pricing that’s impacting drug and insurance companies, as well as a post-pandemic surge in demand for medical services—particularly among seniors—driving up costs for insurers.
That combination is taking a toll on margins and investor sentiment alike, with more pain potentially ahead.
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[ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy)
Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including… [View Bio](/authors/sumit-roy)
Related Topics [Healthcare](http://www.etf.com/topics/healthcare)
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[Insurance](http://www.etf.com/topics/insurance)