Stocks Skid as Drugmakers Fall 09/29 16:05
U.S. stocks skidded Thursday as drug companies and banks absorbed large
losses. Drugmakers faced scrutiny over price increases, while banks fell as
investors worried about the stability of Deutsche Bank and other financial
NEW YORK (AP) -- U.S. stocks skidded Thursday as drug companies and banks
absorbed large losses. Drugmakers faced scrutiny over price increases, while
banks fell as investors worried about the stability of Deutsche Bank and other
Stocks were slightly lower in morning trading, and they fell hard at 12:30
p.m. Eastern time on renewed concerns about Germany's largest bank. EpiPen
maker Mylan fell after legislators called for an investigation of the company.
The price of oil continued to rise, which sent oil drilling and equipment
companies higher. Stocks gave up most of their gains from the last two days.
Quincy Krosby, market strategist for Prudential Financial, said investors
don't trust Deutsche Bank's statements about its financial health and they are
worried what will happen to the bank and to the broader financial system if
Deutsche Bank runs low on capital.
"The market begins to worry about Deutsche Bank and then the relationships
Deutsche Bank has with other banks here in the United States," she said.
The Dow Jones industrial average lost 195.79 points, or 1.1 percent, to
18,143.45. The Standard & Poor's 500 index sank 20.24 points, or 0.9 percent,
to 2,151.13. The Nasdaq composite dropped 49.39 points, or 0.9 percent, to
Mylan slumped after a group of senators asked the Department of Justice to
investigate whether the drugmaker broke the law when it classified its
emergency allergy shot EpiPen as a generic drug, which allowed Mylan to make
lower rebate payments to states. Mylan gave up $1.75, or 4.4 percent, to
$38.47. The stock is down 21 percent since mid-August as the company has come
under criticism for repeatedly raising EpiPen's price over the last decade.
Other drug companies traded lower as investors worry that the government
will take action to rein in drug price increases. Merck fell $1.39, or 2.2
percent, to $61.91. Amgen fell $4.26, or 2.5 percent, to $165.45.
Financial stocks slumped on renewed worries about Deutsche Bank. U.S.
regulators are seeking $14 billion to settle legal claims over its sales of
mortgage securities. It's also unclear whether the German government would
support the bank if it runs low on capital. Deutsche Bank has said it isn't
seeking government aid.
Deutsche Bank's U.S.-listed shares have lost more than half their value this
year. On Thursday they tumbled 82 cents, or 6.7 percent, to $11.48 in heavy
trading. JPMorgan Chase slid $1.06, or 1.6 percent, to $65.65 and Goldman Sachs
shed $4.50, or 2.8 percent, to $158.95.
Oil prices continued to rise after a 5 percent surge the day before. Energy
prices had jumped after the nations of OPEC, which collectively produce more
than third of the world's oil, agreed to a small cut in production. The
decision was a surprise, but something investors had long hoped for. The deal
won't be finalized until November.
U.S. crude picked up 78 cents, or 1.7 percent, to $47.83 a barrel in New
York. Brent crude, the international benchmark, added 55 cents, or 1 percent,
to $49.24 a barrel in London.
Companies that drill for oil rose sharply as investors expected them to
benefit from higher prices for crude. Devon Energy added $1.46, or 3.5 percent,
Companies that provide rigs and other equipment to drillers also rose as
investors expected that higher prices for crude will encourage more drilling.
Helmerich & Payne rose $2.48, or 4 percent, to $65.26. Companies that refine
oil fell on the prospect they will have to pay more money for the oil they
refine. Marathon Petroleum fell $2.90, or 6.8 percent, to $39.74 and Valero
Energy lost $3.40, or 6.2 percent, to $51.71.
ConAgra Foods climbed after its profit surpassed analysts' forecasts, thanks
in part to lower costs. The company has sold several brands to focus on product
lines like Chef Boyardee and Hebrew National, and it's getting ready to split
into two companies. ConAgra rose $3.12, or 7.2 percent, to $46.25.
CBS and Viacom rose after Sumner Redstone's National Amusements, which
controls both companies, said it wants them to combine again. CBS and Viacom
had merged in 1999 and split up in 2006. Viacom, which recently replaced its
CEO and then announced its interim CEO will leave in November, rose $1.21, or
3.3 percent, to $37.77 and CBS rose 42 cents to $54.57.
Chipmakers Qualcomm and NXP Semiconductors surged after the Wall Street
Journal reported that Qualcomm is in talks to buy NXP. It said Qualcomm is
considering other deals, but a purchase of NXP could be worth more than $30
Bond prices moved higher. The yield on the 10-year Treasury note fell to
1.56 percent from 1.57 percent.
In other energy trading, wholesale gasoline fell 1 cent to $1.47 a gallon.
Heating oil rose 2 cents to $1.51 a gallon. Natural gas shed 4 cents to $2.96
per 1,000 cubic feet.
Germany's DAX lost 0.3 percent. Britain's FTSE 100 climbed 1 percent and the
CAC 40 in France rose 0.3 percent. Japan's benchmark Nikkei 225 index jumped
1.4 percent and in South Korea the Kospi advanced 0.8 percent. Hong Kong's Hang
Seng rose 0.5 percent.
Gold rose $2.30 to $1,326 an ounce. Silver gained 7 cents to $19.19 an
ounce. Copper was flat at $2.19 a pound.
The dollar jumped to 101.07 yen from 100.75 yen. The euro inched up to
$1.1216 from $1.1214.