Health care service and provider stocks, along with related exchange traded funds, may fall under the weather as analysts point to sharp contraction in the sub-sector over the first quarter.

According to analysts at JPMorgan Chase & Co. and Pierpont Securities LLC, the updated quarterly data on services showed that health care outlays declined at a 5.8% annualized rate from January through March, compared to the government’s estimate of a 9.7% gain, reports Carlos Torres for Bloomberg.

That data point “should mean there’s a downward revision,” Daniel Silver, a JPMorgan economist, said in the article, referring to the overall U.S. gross domestic product number. The “first quarter is going to be weaker.”

Stephen Stanley, chief economist at Pierpont Securities LLC, argues that second-quarter growth prospects are also negative as the government will have to re-evaluate how the Affordable Care Act, or so-called Obamacare, is affecting consumer spending. Stanley expects the downward revisions to push first quarter GDP numbers to minus 2%.

“In an environment of economic complacency, yet another downward revision to 1Q growth could cause enough of a psychological effect to move the markets, and evidence is mounting that the 2Q bounce will be much smaller than originally thought,” Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC, said in the article.

ETF investors can track the health care providers and services sub-sector through the SPDR S&P Health Care Services ETF (NYSEArca: XHS). The ETF includes a 31.6% allocation toward health care services, 31.2% in health care facilities, 22.1% in managed health care, 14.7% in health care distributors and 0.3% in health care REITs. The health care services ETF also follows a more equal-weight index methodology, with its largest component accounting for 2.5% of the overall portfolio. XHS has gained 10.7% year-to-date. [Cure the Summertime Blues With a Health Care ETF]

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