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US stocks mostly down ahead of Fed; pharma shares flop

WT24 Desk

NEW YORK – Pharmaceutical shares retreated Tuesday, with generics giant Valeant slumping more than 50 percent following a dismal earnings report as US stocks overall finished mostly lower, AFP reports.  The Dow Jones Industrial Average added 22.40 points (0.13 percent) at 17,251.53.

The broad-based S&P 500 shed 3.71 (0.18 percent) to 2,015.93, while the tech-rich Nasdaq Composite Index fell 21.61 (0.45 percent) to 4,728.67. Valeant plunged 51.5 percent after it warned it was at risk of a debt default and slashed its earnings forecast.   The Canadian drugmaker, already under fire for its pricing and accounting practices, pointed to lackluster growth for some of its core products. The potential default is due to delays in filing its annual report due to a review of its financial reporting and internal controls.

Pharma giants Pfizer and Eli Lilly lost 1.9 percent and 3.6 percent.   Declining biotechs were a drag on the Nasdaq, with Celgene losing 2.0 percent, Gilead Sciences 1.1 percent and Biogen 2.9 percent.  Analysts said sentiment was dampened by a weak US retail sales report and a drop in oil prices. It also came ahead of Wednesday’s Federal Reserve policy statement and news conference with Chair Janet Yellen.

While the Fed is not expected to hike interest rates, investors will gauge Yellen’s comments on the likelihood of tightening later this year.  Apple jumped 2.0 percent following a Morgan Stanley report that forecast iPhone sales at 56.5 million in the first quarter, better than expected by most analysts.

Avon Products fell 8.2 percent as it announced plans to move its headquarters to Britain from New York and cut 2,500 jobs. Infant formula maker Mead Johnson Nutrition shot up 11.1 percent on takeover speculation.

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