U.S. stocks skidded 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 12:30 p.m. 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 don’t 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 percent, to 18,143.45. The Standard & Poor’s 500 index sank 20.24 points, or 0.9 percent, to 2,151.13. The Nasdaq composite dropped 49.39 points, or 0.9 percent, 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, or 4.4 percent, to $38.47. The stock is down 21 percent 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, or 2.2 percent, to $61.91. Amgen fell $4.26, or 2.5 percent, to $165.45.
Financial stocks slumped on renewed worries about Deutsche Bank. U.S. regulators are seeking $14 billion to settle legal claims over its sales of mortgage securities. It’s also unclear whether the German government would support the bank if it runs low on capital. Deutsche Bank has said it isn’t seeking government aid.
Deutsche Bank’s U.S.-listed shares have lost more than half their value this year. On Thursday they tumbled 82 cents, or 6.7 percent, to $11.48 in heavy trading. JPMorgan Chase slid $1.06, or 1.6 percent, to $65.65 and Goldman Sachs shed $4.50, or 2.8 percent, to $158.95.
Oil prices continued to rise after a 5 percent 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 won’t be finalized until November.
U.S. crude picked up 78 cents, or 1.7 percent, to $47.83 a barrel in New York. Brent crude, the international benchmark, added 55 cents, or 1 percent, to $49.24 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, or 3.5 percent, to $43.04.