NEW YORK (Reuters) – Plunging healthcare stocks dragged Wall Street lower on Wednesday, offsetting a spate of upbeat corporate earnings and encouraging economic data from the United States and China.

All three major U.S. stock indexes were down, but the S&P 500 slipped to more than a percent below its record high reached in September.

The healthcare sector was on track for its biggest percentage drop in four months, falling 3.3% on regulatory jitters.

UnitedHealth Group Inc, Pfizer Inc and Merck & Co Inc dropped from 2.8% and 3.9%, and were among the biggest drags on the broader S&P 500.

“The fear among healthcare stock owners is some move to ‘Medicare for all,’” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. “The movement towards something like that seems unstoppable.”

The sector’s drop dampened generally upbeat earnings from a broad range of sectors.

Morgan Stanley rose 2.4% after beating analyst estimates due to cost-cutting and growth in its wealth management segment.

United Continental Holdings Inc advanced 4.6% following Tuesday’s after-market earnings report, where the airliner bested consensus estimates and held its 2019 profit target firm, even as Boeing Co’s 737 MAX jets remain grounded.

Robust business jet demand drove Textron Inc’s earnings beat, driving its stock up 4.2%.

PepsiCo Inc reported better-than-expected first-quarter sales on strong North American demand. The packaged food company’s shares were up 3.3%.

With reporting season in high gear, analysts now expect first-quarter S&P 500 profits to have dropped 1.8% year-on-year, according to Refinitiv data, which would mark the first earnings decline since 2016.

Of the 54 S&P 500 companies that have posted thus far, 79.6% have beaten consensus, compared with the 65% average beat rate going back to 1994.

“This has turned into a decent earnings season,” Tuz added. Revenues have been OK and you haven’t heard guidance that things are getting softer.”

The Dow Jones Industrial Average fell 35.34 points, or 0.13%, to 26,417.32, the S&P 500 lost 9.85 points, or 0.34%, to 2,897.21 and the Nasdaq Composite dropped 18.62 points, or 0.23%, to 7,981.61.

Of the 11 major sectors in the S&P 500, six were trading in the black.

Qualcomm Inc jumped 12.0% after the chipmaker settled its long-running legal battle with Apple Inc. Apple shares edged 1.6% higher.

The news boosted the Philadelphia SE Semiconductor index, which rose 1.5%.

On the economic front, the U.S. trade deficit dropped to an eight-month low in February due to a 20.2% plunge in imports from China. The trade balance with China, a focus of President Donald Trump’s trade policy, showed the deficit shrinking by 28.2%.

China, meanwhile, saw its first-quarter GDP grow at a better-than-expected 6.4% annual rate, adding to optimism that the world’s second-largest economy might be starting to stabilize.

Declining issues outnumbered advancing ones on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.73-to-1 ratio favored decliners.

The S&P 500 posted 45 new 52-week highs and five new lows; the Nasdaq Composite recorded 64 new highs and 58 new lows.

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