Investors sent stocks sharply lower Friday, as oil prices continued their climb higher and new questions about the safety of arthritis drugs pressured pharmaceutical stocks. The Dow Jones industrial average, which includes drug makers Pfizer Inc. and Merck & Co., recorded a triple-digit loss.
Uninspiring September retail sales contributed to the market’s malaise.
Investors were newly uneasy about drug stocks after a new scientific study showed that Pfizer’s Celebrex could cause cardiovascular problems similar to those caused by Merck’s Vioxx, which was pulled from the market last week after Merck found a heightened risk of heart attack and stroke. The news fed selling in the rest of the drug sector.
Investors also bid stocks lower as oil prices reached a record $53 per barrel in intraday trading, as production problems in Russia, Nigeria and the Gulf of Mexico combined to spark another wave of speculation. A barrel of crude oil settled at $52.67, up 65 cents, on the New York Mercantile Exchange.
“Oil continues to be the big story here, and it’s going to be hard for the markets to break out of a range while this continues to be a problem,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “It adds to the uncertainty in the market over earnings and the election.”
At the close, the Dow Jones industrials were down 114.52 points, or 1.1 percent, at 10,125.40, while the broader Standard & Poor’s 500-stock index was down 11.40 points, or 1 percent, at 1,130.65. The Nasdaq composite index, full of technology stocks, slid 22.51 points, or 1.1 percent, to 1,948.52.
Pharmaceutical stocks dropped as the New England Journal of Medicine reported its findings on the possibility of cardiovascular risks connected to Pfizer’s Celebrex. Pfizer, which had risen after Merck pulled Vioxx from the market last week, slumped $1.19 to $29.99, while Merck dropped 69 cents to $30.98.
Other drugmakers also fell as investors worried that their products would also face more intense scientific scrutiny. Eli Lilly & Co. slid $1.91 to $59.56, AstraZeneca PLC lost 84 cents to $38.80, and GlaxoSmithKline PLC fell $1.15 to $41.90.
A lot of the weakness we’re seeing today has a lot to do with the drug stocks,” said Todd Leone, managing director of equity trading at SG Cowen Securities. “When you look at it, that’s been a key mover today, and [Pfizer and Merck are] both Dow components.”
A mediocre retail sales report for September led to new fears that rising oil prices would continue to limit consumer spending with the fourth-quarter’s all-important holiday shopping season coming up.
Results at most major retailers were mixed, with the biggest gains coming from apparel chain American Eagle Outfitters Inc., which reported a 22.7 percent rise in same-store sales — sales at stores open at least a year. Talbots Inc., also a clothing retailer, saw a 1.3 percent drop in same-store sales, which was actually better than the 4.0 percent drop Wall Street expected. American Eagle gained 20 cents to $37.62 on the news, while Talbots rose 20 cents to $25.99.
Costco Wholesale Corp. climbed $1.72 to $44.65 after the company reported a 24 percent hike in earnings for the third quarter, beating Wall Street estimate by 4 cents per share. The bulk retailer also saw an 8 percent increase in same-store sales in September.
Investors’ concerns about the economy were assuaged somewhat as the Labor Department reported a steep drop in first-time unemployment claims. The number of new jobless claims dropped last week by 37,000 to 335,000 the lowest level since the beginning of September. Wall Street had been expecting 355,000 claims for the week.
The big test for employment, however, will come Friday, when the Labor Department issues its monthly jobs creation report. With the report carrying a great deal of weight on Wall Street, some investors were keeping to the sidelines Thursday.
Bank of America Corp. said it will cut an additional 4,500 jobs as part of its integration with FleetBoston Financial Corp., which it acquired earlier this year. Bank of America was up 18 cents at $45.43.
Hotel giant Marriott International Inc. fell 80 cents to $54.02 despite posting quarterly profits that surpassed analysts’ forecasts by a penny per share. The company cited strong demand and a rate increase for a 9 percent rise in quarterly revenue.
Overseas, Japan’s Nikkei stock average fell 0.3 percent. In Europe, Britain’s FTSE 100, Germany’s DAX index and France’s CAC-40 each fell 0.2 percent for the session.