Market Wrap: Stocks Drift Lower as Early Rally Fades

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Financial Markets Wall Street Ferrari's Debut
Richard Drew/APFiat Chrysler chairman John Elkann, second left, Ferrari CEO Amedeo Felisa, center, Piero Ferrari, son of Ferrari founder Enzo Ferrari, second right, and Fiat Chrysler CEO Sergio Marchionne, ring the opening bell at the New York Stock Exchange to mark Ferrari's IPO, Wednesday.
By Caroline Valetkevitch

NEW YORK -- U.S. stocks fell Wednesday as a sharp drop in Valeant Pharmaceuticals hit health care shares, while the energy sector dropped along with oil prices.

Adding to the negative tone, Yahoo (YHOO) shares fell 5.2 percent to $31.12, a day after the Internet company's quarterly earnings and profit missed expectations.

Valeant Pharmaceuticals' (VRX) U.S.-listed shares sank to an intraday low of $88.50 on record volume, losing about $9.6 billion in market capitalization, after short-seller Citron Research released a report critical about the company.

The stock later pared losses after investor Bill Ackman said Wednesday he increased his Valeant stake by about 2 million shares. The stock ended down 19.2 percent at $118.61, its lowest level since October 2014.

Shares of Allergan (AGN), which has a business model similar to that of Valeant, was down 1.7 percent at $259, cutting earlier losses after the company said nearly all of its drugs are being distributed through traditional wholesale and retail channels.

Also in the health care sector, insurers Aetna (AET), Humana (HUM), Anthem (ANTM) and Cigna (CI) all fell at least 3 percent after Democratic presidential candidate Hillary Clinton said she had "serious concerns" about the mergers the companies were proposing.

A drop in crude oil prices weighed on the S&P 500 energy sector, which fell 1 percent. That led sector declines for the S&P 500, followed by materials, down 0.9 percent, and S&P health care, also down 0.9 percent.

Lower Oil Prices

"Oil inventories were up quite a bit, so energy was down and that weighed down the market. Going into the afternoon the buyers were just lined up to watch as we drifted lower into the the close," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

"Also there was weakness in health care, not just in individual stocks, but that sector underperformed."

The Dow Jones industrial average (^DJI) fell 48.5 points, or 0.3 percent, to 17,168.61, the Standard & Poor's 500 index (^GSPC) lost 11.83 points, or 0.6 percent, to 2,018.94 and the Nasdaq composite (^IXIC) dropped 40.86 points, or 0.8 percent, to 4,840.12.

On the plus side, shares of General Motors (GM) rose 5.8 percent to $35.42, while Boeing (BA) rose 1.7 percent to $141.19, after both industry heavyweights reported better-than-expected results.

Ferrari (RACE) was up 5.8 percent at $55 in its debut on the New York Stock Exchange.

Stocks have mostly gained this month following a sharp selloff in the third quarter.

Declining issues outnumbered advancing ones on the NYSE by 2,173 to 888, for a 2.45-to-1 ratio on the downside; on the Nasdaq, 2,066 issues fell and 717 advanced for a 2.88-to-1 ratio favoring decliners.

The S&P 500 posted 27 new 52-week highs and 5 new lows; the Nasdaq recorded 52 new highs and 82 new lows.

What to watch Thursday:
  • The Labor Department releases weekly jobless claims at 8:30 a.m. Eastern time.
  • At 10 a.m., the National Association of Realtors releases existing home sales for September, and Freddie Mac releases weekly mortgage rates.
Earnings Season
These selected companies are scheduled to release quarterly financial results:
  • 3M Co. (MMM)
  • Alphabet Inc. (GOOGL)
  • (AMZN)
  • Caterpillar (CAT)
  • McDonald's (MCD)
  • Microsoft (MSFT)
  • Southwest Airlines (LUV)
  • Union Pacific (UNP)
  • United Continental Holdings (UAL)
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