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US: Stocks mostly down ahead of Fed, pharma shares flop

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[NEW YORK] Pharmaceutical shares retreated Tuesday, with generics giant Valeant slumping more than 50 per cent following a dismal earnings report as US stocks overall finished mostly lower.

The Dow Jones Industrial Average added 22.40 points (0.13 per cent) at 17,251.53.

The broad-based S&P 500 shed 3.71 (0.18 per cent) to 2,015.93, while the tech-rich Nasdaq Composite Index fell 21.61 (0.45 per cent) to 4,728.67.

Valeant plunged 51.5 per cent 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 per cent and 3.6 per cent.

Declining biotechs were a drag on the Nasdaq, with Celgene losing 2 per cent, Gilead Sciences 1.1 per cent and Biogen 2.9 per cent.

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 per cent following a Morgan Stanley report that forecast iPhone sales at US$56.5 million in the first quarter, better than expected by most analysts.

Avon Products fell 8.2 per cent 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 per cent on takeover speculation.


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