MW UnitedHealth is pushing the Dow toward a never-before-seen disconnect with the S&P 500. What it means for the stock market.

By Isabel Wang

One stock out of 30 on the Dow has a greater impact than one stock in the S&P 500

A steep slide in UnitedHealth Group Inc. shares was dragging on the Dow Jones Industrial Average on Thursday, putting the blue-chip index on track for historical underperformance versus the S&P 500.

The Dow DJIA was tumbling more than 1.1% as of 12 p.m. Eastern time on Thursday, but the S&P 500 SPX was edging higher - a rare divergence between the two major stock benchmarks that generally move together.

The unusual disconnect is attributed to a more than 23% plunge in shares of UnitedHealth $(UNH)$. The health insurer on Thursday slashed its full-year outlook and missed quarterly expectations for the first time in years. Its shares were shaving over 760 points off the Dow on its own, according to FactSet data.

See: UnitedHealth sees a surprise jump in seniors getting treatment, and stock suffers biggest drop in decades

If it holds, it would mark the first time on record that the Dow falls by at least 1% while the S&P 500 gains on the same day. On a percentage-point basis, the blue-chip index is also on pace for its largest underperformance compared to the large-cap index since Nov. 10, 2022, according to Dow Jones Market Data.

"One stock out of 30 [on the Dow] has a greater impact than one stock out of 500 [in the S&P 500 index]," said Brian Mulberry, portfolio manager at Zacks Investment Management.

"Typically, the Dow is a bit more even-keeled because you're looking at very large, very established businesses that represent what is probably the cream of the crop when it comes to the U.S. economy, and they don't tend to have volatility like we've seen today," he told MarketWatch in a phone interview on Thursday. "In other words, most of these companies don't miss earnings the way that UnitedHealth did at this point in time," Mulberry said.

To be sure, one reason the Dow was experiencing a significant downturn on Thursday while other major stock indexes were holding up is due to its nature as a price-weighted index. Unlike the S&P 500, which is a market-cap-weighted index and gives greater influence to larger companies with higher market capitalization, the 30-member Dow solely considers the share prices of its component, making it particularly sensitive to price movements.

Shares of UnitedHealth were the largest component of the Dow by weight as of Wednesday afternoon, meaning its stock price has the greatest impact on the index's overall performance. UnitedHealth's stock finished at $585.04 per share on Wednesday before tumbling to around $450.84 on Thursday, according to FactSet data.

The underperformance for the Dow on Thursday also marks a sharp reversal from earlier this year, when the blue-chip index has slightly outperformed the S&P 500 and the Nasdaq Composite COMP after President Donald Trump's ever-changing tariff plans sent financial markets into a tailspin.

The Dow has fallen 7.7% so far this year, while the S&P 500 has slumped nearly 10% and the Nasdaq was off over 15% in the same period, according to FactSet data.

"Dow has more financial institutions like big banks as its components, which are a bit more insulated from things like tariffs, so the index has less sensitivity to some of the market volatility that we've seen so far in 2025," Mulberry said. The companies on the S&P 500 also tend to be "more temperamental" and could react to any slight changes in earnings growth, he added.

U.S. stocks were mostly lower on Thursday, the last trading day of the week. The Dow was falling over 450 points, or 1.1%, while the S&P 500 was rising 0.5% and the Nasdaq was up 0.2%, according to FactSet data.

-Isabel Wang

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(END) Dow Jones Newswires

April 17, 2025 12:30 ET (16:30 GMT)

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