Nasdaq plunges 3%, Dow loses 313 points

29 Sep 2015 | Author: | No comments yet »

Biotech fund posts worst single-day drop in 4 years.

A Monday slide by biotech shares pushed the iShares Nasdaq Biotechnology exchange-traded fund IBB, -6.33% to its worst single-session performance in more than four years. On Monday, selling accelerated after Democratic lawmakers distributed a letter calling for a subpoena to force Valeant Pharmaceuticals (VRX) to fork over more documents related to price increases for two heart drugs. The downdraft in biotech stocks comes fresh on the heels of the sector’s worst weekly performance in seven years and places the biotech fund, which hit its peak in mid July, squarely in bear-market territory, which is a decline of at least 20% from a recent peak. Biotechnology shares tumbled on Friday, offsetting gains fueled by Fed Chair Janet Yellen’s reassurances that turbulence in emerging markets won’t harm U.S. growth.

Last week the biotech sector’s IBB suffered a more than 13% drop as presidential hopeful Hillary Clinton criticized drug prices and laid out a plan to curb costs. Dudley said Monday the central bank will “probably” raise interest rates later this year despite uncertainties over global growth. “I think that the economy is doing pretty well,” Dudley said at an event in New York. The biotech industry has been one of the highest-flying sectors during the stock market’s bull run, and as a result has been the target of bubble calls by industry watchers and analysts.

A report Monday showed household spending climbed more than forecast in August and incomes also rose as the biggest part of the U.S. economy continued to power past a global slowdown. One trader said that the selling “feels heavily index driven,” meaning that investors are bailing on index-tracking exchange-traded funds — and fast. We’re losing what little leadership we had left.” The Nasdaq Biotech Index slid into a bear market on Friday amid its worst weekly decline in four years.

Stocks fell after the Fed’s decision to hold off raising rates on Sept. 17 raised questions about the impact of a global growth slowdown on the U.S.

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