The healthcare sector, represented by the Health Care Select Sector SPDR Fund (NYSEARCA: XLV), has significantly lagged behind the broader market in 2025. Year-to-date, XLV is down about 1%, while the S&P 500 has continued to show resilience and storm higher toward new all-time highs. Political and economic headwinds have weighed heavily, particularly concerns that a more interventionist administration could tighten regulations around drug pricing and add pressure to insurers.
Significant holdings like UnitedHealth Group, Merck, and Pfizer have been caught in the crossfire. Rising costs tied to the Affordable Care Act, delays in Medicaid rate hikes, and ongoing headline risks have kept sentiment in check.
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