US stocks fell on 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 institutions.
Stocks were slightly lower in morning trading, and they fell hard at 12.30pm. 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 do not 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%, to 18,143.45. The Standard & Poor's 500 index sank 20.24 points, or 0.9%, to 2,151.13. The Nasdaq composite dropped 49.39 points, or 0.9%, to 5,269.15.
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 dollars, or 4.4%, to 38.47 dollars. The stock is down 21% 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 dollars, or 2.2%, to 61.91 dollars. Amgen fell 4.26 dollars, or 2.5%, to 165.45 dollars.
Financial stocks slumped on renewed worries about Deutsche Bank. US regulators are seeking 14 billion dollars to settle legal claims over its sales of mortgage securities. It is also unclear whether the German government would support the bank if it runs low on capital. Deutsche Bank has said it is not seeking government aid.
Deutsche Bank's US-listed shares have lost more than half their value this year. On Thursday they tumbled 82 cents, or 6.7%, to 11.48 dollars in heavy trading. JPMorgan Chase slid 1.06 dollars, or 1.6%, to 65.65 dollars and Goldman Sachs shed 4.50 dollars, or 2.8%, to 158.95 dollars.
Oil prices continued to rise after a 5% 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 will not be finalised until November.
US crude picked up 78 cents, or 1.7%, to 47.83 dollars a barrel in New York. Brent crude, the international benchmark, added 55 cents, or 1%, to 49.24 dollars 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 dollars, or 3.5%, to 43.04 dollars.
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 dollars, or 4%, to 65.26 dollars. 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 dollars, or 6.8%, to 39.74 dollars and Valero Energy lost 3.40 dollars, or 6.2%, to 51.71 dollars.
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 is getting ready to split into two companies. ConAgra rose 3.12 dollars, or 7.2%, to 46.25 dollars.
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 chief executive and then announced its interim chief executive will leave in November, rose 1.21 dollars, or 3.3%, to 37.77 dollars and CBS rose 42 cents to 54.57 dollars.
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 billion dollars.
Bond prices moved higher. The yield on the 10-year Treasury note fell to 1.56% from 1.57%.
In other energy trading, wholesale petrol fell one cent to 1.47 dollars a gallon. Heating oil rose two cents to 1.51 dollars a gallon. Natural gas shed four cents to 2.96 dollars per 1,000 cubic feet.
Germany's Dax lost 0.3%. Britain's FTSE 100 climbed 1% and the CAC 40 in France rose 0.3%. Japan's benchmark Nikkei 225 index jumped 1.4% and in South Korea the Kospi advanced 0.8%.
Hong Kong's Hang Seng rose 0.5%.
Gold rose 2.30 dollars to 1,326 dollars an ounce. Silver gained seven cents to 19.19 dollars an ounce. Copper was flat at 2.19 dollars a pound.
The dollar jumped to 101.07 yen from 100.75 yen. The euro inched up to 1.1216 from 1.1214 dollars.