Wall St down on weak results; health stocks hit by probe

By Abhiram Nandakumar

(Reuters) - U.S. stocks reversed course to move lower on Thursday morning after a raft of weak earnings reports, while the healthcare sector sank after the U.S. launched a probe into drug prices.

The weakness was broad based, with eight of the 10 major S&P sectors lower, and overshadowed Facebook's strong quarterly results that sent its shares to a record high.

Facebook rose 6.5 percent to $110.65 and gave the biggest boost to the S&P and Nasdaq.

A U.S. Senate panel on Wednesday launched a probe into eye-popping drug price increases, seeking documents from four drugmakers including Valeant.

The probe was affecting the entire biotech group and broader market as well, said Larry Peruzzi, a senior equity trader at Cabrera Capital Markets Inc in Boston.

The healthcare sector fell 1 percent while the Nasdaq biotech index dropped 2.63 percent, also weighed down by Celgene's weak results.

Celgene fell 5.6 percent to $120 after posting its slowest revenue growth in five quarters. Valeant sank 18.5 percent to $74.90.

The material index's 1.07 percent fall however was the steepest among the S&P sectors.

The sector was hit by weak results from CF Industries and as copper and other metals sank to its lowest price in a month on the prospects of a December interest rate hike.

Investors are awaiting Friday's crucial monthly nonfarm payrolls data to gauge if the Federal Reserve will lift rates next month, a likelihood Fed Chair Janet Yellen alluded to on Wednesday.

Stocks have rallied since the Fed signaled last week that a December rate hike was still on the table, yet the ongoing debate over when the central bank will end an era of near-zero interest rates has added to investor uncertainty.

At 11:13 a.m. ET (1613 GMT), the Dow Jones industrial average was down 76.74 points, or 0.43 percent, at 17,790.84.

The S&P 500 was down 8.98 points, or 0.43 percent, at 2,093.33 and the Nasdaq Composite index was down 34.06 points, or 0.66 percent, at 5,108.42.

Qualcomm's shares slumped 15 percent to $51.44 after its weak profit forecast for the first quarter. The stock was the biggest drag on the S&P 500 and the Dow.

HomeAway surged 23.4 percent to $39.53 after Expedia said it would buy the vacation rental site for $3.9 billion. Expedia was up 3 percent at $138.23.

Declining issues outnumbered advancing ones on the NYSE by 1,869 to 1,011. On the Nasdaq, 1,649 issues fell and 941 advanced.

The S&P 500 index showed 14 new 52-week highs and five new lows, while the Nasdaq recorded 55 new highs and 51 new lows.

(Reporting by Abhiram Nandakumar in Bengaluru; Additional reporting by Caroline Valetkevitch; Editing by Savio D'Souza)