It was another down day on Wall Street as health-care stocks tanked amid worries that President Obama's budget will clamp industry profits.
The Dow Jones Industrial Average lost 88.81, or 1.2 percent, to close at 7,182.08. The S&P 500shed 1.6 percent to end at 752.83, and the Nasdaq dropped 2.4 percent to close at 1,391.47.
Health-care stocks were among the day's biggest decliners as investors worried that President Obama's budget would clip Medicare payments to insurance companies and hospitals to put a dowpayment on the plan for universal health care. Plus, there's a provision in there that would allow consumers to buy cheaper medications from overseas companies and prevent drug makers from blocking generic competition.
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Insurers Humana and Aetna shed 20 percent and 11 percent, respectively.
Merck , was the biggest decliner on the Dow, falling 6.7 percent. Eli Lilly and Bristol-Myers both lost about 5 percent.
Bank of America gained 3.1 percent after President Obama said he penciled more money into the budgetfor banks if necessary.
JPMorgan rose 6.1 percent, and regional banks SunTrust and Fifth Third shot up 18 percent each.
Citigroup rose initially but turned negative, ending down 2.4 percent, as investors worry about the future of the bank. The government may be on the verge of boosting its stake in Citigroup to as much as 40 percent, the Wall Street Journal reported.
American depositary shares of UBS picked up 10 percent after the Swiss bank announced CEO Marcel Rohner will be succeeded by Oswald J. Gruebel, formerly head of crosstown rival Credit Suisse.
Shares of student-loan provider Sallie Mae tumbled more than 30 percent amid worries that Obama's budget would kill the federally guaranteed student-loan program.
Stocks have whipsawed their way through a volatile week so far, with comments from Federal Reserve Chief Ben Bernanke and President Obama lending support and caution in equal measure.
IBM was the biggest gainer on the Dow after the tech blue chip backed its full-year outlook, saying it sees growth in services.
General Motors lost 6.7 percent after the troubled auto maker reported a loss of more than $30 billion for 2008. The company, which submitted its road map for recovery to the US Treasury last week, said it expected auditors to cast doubt on whether GM can survive.
American International Group jumped 13 percent as the insurance giant faces deep restructuring as it pushes on with discussions with US authorities. The group could be split into at least three government-controlled parts, the Financial Times reported, citing people close to the situation.
In economic news, new home sales slumped 10.2 percentto a record low pace of 309,000 in January as prices hit a five-year low. Economists had expected a much more modest drop to a 330,000 rate.
New jobless claims jumped by 36,000 to 667,000, the highest since 1982, last week. Continuing claims popped over the 5 million mark to a record 5.11 million.
And durable-goods orders dropped 5.2 percent to $163.8 billion in January, more than double of what was expected, and the prior month was revised sharply lower. Excluding volatile transportation components, orders fell just 2.5 percent.
Still to Come:
THURSDAY: Earnings from Dell, Gap, and Kohl's after the bell
FRIDAY: GDP; consumer sentiment
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