9:27 am | Wednesday, September 24th, 2014
Wall Street stocks slumped Tuesday for the third straight session as data showed a weakening eurozone economy and US tax rules to fight inversions hit pharmaceutical stocks. AP
NEW YORK–Wall Street stocks slumped Tuesday for the third straight session as data showed a weakening eurozone economy and US tax rules to fight inversions hit pharmaceutical stocks.
The Dow Jones Industrial Average finished off 116.81 points (0.68 percent) at 17,055.87.
The broad-based S&P 500 dropped 11.52 (0.58 percent) to 1,982.77, while the tech-rich Nasdaq Composite lost 19.00 (0.42 percent) at 4,508.69.
Wall Street followed suit with European markets, nearly all in the red after a key survey showed business activity in the 18-nation eurozone slowed further in September, adding to concerns that a sluggish economic recovery could be close to stalling.
The Markit composite purchasing managers index fell for a second consecutive month, hitting a nine-month low of 52.3 points in September from 52.5 points in August.
“The latest PMI data are testimony to the lackluster nature of the eurozone’s economic recovery,” said ING analyst Martin van Vliet.
That offset a modestly positive manufacturing HSBC PMI for China that nevertheless came with warnings of risks to growth ahead.
Qu Hongbin, HSBC’s chief economist for China, said that while the result indicated manufacturing sector activity was stabilizing this month, expansion was still modest.
“The property downturn remains the biggest downside risk to growth,” he said in a statement.
New US Treasury tax rules designed to curb inversion deals, in which US companies merge with foreign businesses to relocate in a lower tax address, had a marked impact on pharmaceuticals, the main industry involved in inversions.
AbbVie, pressing a $52 billion inversion merger with Ireland’s Shire Pharmaceuticals, fell 2.0 percent. The US-traded shares of AstraZeneca, which had been an inversion target of Pfizer earlier this year, lost 4.7 percent, while Pfizer dropped 0.4 percent.
Medical equipment firm Medtronic, planning a $43 billion inversion merger with Covidien that would transfer its tax domicile to Ireland, lost 2.9 percent, and Covidien fell 2.5 percent.
Apple jumped 1.6 percent after saying it sold 10 million of the new iPhone 6 over the weekend, and rejecting reports it would close the Beats streaming music service it paid $3 billion for earlier this year.
Alibaba continued to slip from its post-IPO high above $99, losing 3.0 percent from Monday to $97.17, still far above Friday’s debut at the IPO price of $68.
Salix Pharmaceuticals jumped 5.8 percent driven by reports that Allergan was in talks on a $10 billion deal to buy it, which would likely serve to block the William Ackman-backed Valeant bid for Allergan.
Allergan added 1.8 percent, while Valeant gave up 0.3 percent.
Bond prices rose. The yield on the 10-year US Treasury dipped to 2.54 percent from 2.57 percent Monday, while the 30-year fell to 3.25 percent from 3.29 percent. Bond prices and yields move inversely.
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