By Caroline Valetkevitch
(Reuters) - U.S. stocks fell on Wednesday as a sharp drop in Valeant Pharmaceutical hit the healthcare space, while the energy sector dropped along with oil prices.
Adding to the negative tone, Yahoo shares fell 5.2 percent to $31.12, a day after the Internet company's quarterly earnings and profit missed expectations.
Valeant Pharmaceutical's 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 he increased his Valeant stake on Wednesday by about 2 million shares. The stock ended down 19.2 percent at $118.61, its lowest level since October 2014.
Shares of Allergan , 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 healthcare sector, insurers Aetna , Humana , Anthem and Cigna all fell at least 3 percent after Democratic presidential candidate Hillary Clinton said she had "serious concerns" about the mergers the companies were proposing.
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A drop in crude oil prices weighed on the S&P 500 energy sector <.SPNY>, which fell 1 percent. That led sector declines for the S&P 500, followed by materials <.SPLRCM>, down 0.9 percent, and S&P health care <.SPXHC>, also down 0.9 percent.
"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 close," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
"Also there was weakness in healthcare, not just in individual stocks, but that sector underperformed."
The Dow Jones industrial average fell 48.5 points, or 0.28 percent, to 17,168.61, the S&P 500 lost 11.83 points, or 0.58 percent, to 2,018.94 and the Nasdaq Composite dropped 40.86 points, or 0.84 percent, to 4,840.12.
On the plus side, shares of General Motors rose 5.8 percent to $35.42, while Boeing rose 1.7 percent to $141.19, after both industry heavyweights reported better-than-expected results.
Ferrari 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 favouring 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.
(Editing by Don Sebastian and Chizu Nomiyama)