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) 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) , highlighting the unusual divergence between healthcare and the broader market.

The catalyst was a stunning 16% drop in shares of UnitedHealth Group Inc. (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) and Johnson & Johnson Inc. (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 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.

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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