Markets |
Wall Street drops as anxious investors eye China
DJ: 16,001.89 -312.78 NAS:
4,543.97 -142.53 S&P: 1,881.77
-49.57
(Reuters) U.S.
stocks finished sharply lower on Monday and were on track for their worst
quarter in four years as investors worried about the health of China's economy
and its potential impact on the timing of a U.S. interest rate increase.
Much of the damage came
from pharmaceutical and biotech stocks after Democratic lawmakers on Monday
attacked "massive" price increases of two heart drugs from
Canada's Valeant Pharmaceuticals International Inc(VRX.TO),
which tumbled 16.5 percent.
The Nasdaq biotechnology index .NBI fell 6
percent, its worst one-day drop since 2011, adding to losses from last
week when Democratic presidential candidate Hillary Clinton criticized drug
pricing.
Among the S&P sectors, the health care index .SPXHC was the
deepest decliner, down 3.84 percent.
"The broad healthcare sector and China are hurting the market. It's time for
risk-off and there's no place to hide," said Richard Weeks, managing
director at HighTower Advisors in Vienna, Virginia.
Profits at Chinese
industrial companies fell 8.8 percent, fresh data showed, pushing
down shares of raw material producers and energy companies. Oil prices fell
more than 2 percent.
U.S. consumer spending rose more than expected in August,
according to another report, appearing to add to the case for an interest rate
increase this year.
But contracts to buy previously owned U.S. homes decreased,
indicating the robust housing market could be losing some steam.
The Federal Reserve held off from raising rates at its September
meeting, citing concerns about the global economy, notably China, among
other factors.
New York Federal Reserve President William Dudley on Monday
suggested the central bank could pull the trigger as soon as October.
"A lot of investors
think the Fed is confused," said Mohannad Aama, Managing Director at Beam Capital
Management LLC. "They're putting themselves in a corner by saying they
expect to raise rates between now and the end of the year when the economy
every day is proving otherwise."
Several other Fed
officials are scheduled to speak during the week, including Chair Janet Yellen
on Wednesday.
Investors will also scrutinize September non-farm payrolls data
on Friday.
The Dow Jones industrial
average .DJI fell 1.92 percent to end at 16,001.89
points. The S&P 500 .SPX lost 2.57 percent to 1,881.77 and the Nasdaq Composite .IXIC dropped 3.04 percent to finish at
4,543.97.
Billionaire investor Carl Icahn said the Fed's low interest
rates are creating bubbles in markets for art, property and "junk"
bonds, in a video to be released on Tuesday.watch.reuters.tv/HBv
Alcoa's (AA.N)
shares jumped 5.73 percent after the aluminum producer said it would split into
two publicly-traded companies.
The largest drag on the S&P 500, Apple (AAPL.O) fell 1.97 percent despite reporting
that it sold a record number of its new iPhones in their first weekend.
Declining issues outnumbered advancing ones on the NYSE by 2,796
to 316. On the Nasdaq, 2,397
issues fell and 452 advanced.
The S&P 500 index showed no new 52-week highs and
80 lows, while the Nasdaq recorded 12 new highs and 358 lows.
About 8.3
billion shares changed hands on U.S. exchanges, above the 7.2 billion
daily average for the past 20 trading days, according to Thomson Reuters data.
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