Healthcare insurance giant UnitedHealth Group (UNH 1.48%) has seen its stock go from a stable stalwart to a falling knife, seemingly overnight. The stock's price crashed 22.4% on April 17 in response to its first-quarter earnings results and full-year guidance cut. Then on Tuesday, UnitedHealth fell 17.8% in a single session after its CEO stepped down and the company removed its full-year guidance.
The sell-off has pushed shares of UnitedHealth down to around their lowest level in five years. The dividend stock has tumbled 38.5% year to date -- close to Moderna, which is down 42% and the worst-performing company in the S&P 500 (^GSPC 0.11%) in 2025 (so far).
Here's why UnitedHealth has gone from bad to worse, and why its drop is impacting the Dow Jones Industrial Average (^DJI 0.04%) even more than it is the S&P 500.
Image source: Getty Images.
Why UnitedHealth is nose-diving
UnitedHealth makes money from two key segments: UnitedHealthcare and Optum.
UnitedHealthcare collects premiums on health insurance plans covering individuals, employers, and Medicare and Medicaid beneficiaries. Optum is the company's health services segment.
Both segments had solid year-over-year growth. And as you can see in the following chart, UnitedHealth (and its investors) had enjoyed a fairly uninterrupted period of stable revenue and earnings growth that fueled a higher stock price.
Data by YCharts; TTM = trailing 12 months.
But UnitedHealth is facing higher costs, Department of Justice investigations into its Medicare Advantage billing practices, and other issues.
In a May 13 press release, UnitedHealth said it plans to return to growth in 2026. But it suspended its full-year outlook due to accelerating care activity, broadening to more types of benefit offerings, and because medical costs of Medicare Advantage beneficiaries new to UnitedHealthcare have been higher than expected.
With the company's business model under pressure, investors are left with more questions than answers, leading to the steep sell-off.
S&P-vs.-Dow dynamics
Even though UnitedHealth is down over 50% from its all-time high, reached in late 2024, it is still a massive company with a market cap of around $282 billion. It is one of the most valuable companies in the healthcare sector, but is tiny in comparison to mega-cap tech stocks.
So, on its own, UnitedHealth can't move the S&P 500 by that much, even though it's down so much in 2025. However, the sell-off has affected the Dow.
The Dow has only 30 components compared to 503 in the S&P 500. And the Dow is price-weighted, so a stock's price, rather than market cap, dictates its weighting in the Dow.
For example, Nvidia is one of the most valuable companies in the world, with a market cap of around $3 trillion. Still, it is the 23rd highest-weighted Dow component simply because it has so many shares and a low stock price.
In April of last year, UnitedHealth was the heaviest-weighted component in the Dow. But now, that crown belongs to Goldman Sachs, which has a stock price just over $600 a share and makes up 8.6% of the index.
UnitedHealth's 52-week high is over $630 a share -- meaning its drawdown has had an impact of roughly 4 percentage points on the Dow, or roughly 3 percentage points YTD. That's the difference between the Dow being down 1% in 2025 and up 2%.
Dissecting index movements
Even if you're not interested in UnitedHealth stock or the healthcare sector, it's important to know what stocks drive the major indexes.
For example, Apple, Nvidia, Microsoft, Amazon, Alphabet, and other big tech names can single-handedly move the S&P 500, and to a larger extent, the Nasdaq Composite. And Dow components with relatively high nominal stock prices like Goldman Sachs, Microsoft, UnitedHealth, Home Depot, Sherwin-Williams, Visa, and Caterpillar can impact the blue-chip Dow index.
Knowing the differences between market-cap-weighted indexes and price-weighted indexes can be useful for filtering out market noise and determining what information is relevant to your portfolio.
