U.S. stocks fell, pushing benchmark indexes to their lowest levels of the year. Bristol-Myers Squibb, Eli Lilly and Pfizer led the retreat as U.S. regulators expanded a probe of drug marketing and pricing.
The Dow Jones industrial average fell 44.12, or 0.6 percent, to 7524.06; the Nasdaq composite index shed 6.90, or 0.5 percent, to 1271.47.
The Standard & Poor's 500-stock index fell 6.75, or 0.8 percent, to 800.73.
The Nasdaq had its worst finish this year as it dropped below the low reached Feb. 13. The S&P 500 and Dow closed at 2003 lows for a second day. Year to date, the S&P 500 has fallen 9 percent, the Dow has lost 9.8 percent and the Nasdaq has declined 4.8 percent.
Eleven of the S&P 500's 13 pharmaceutical stocks declined. King Pharmaceuticals tumbled $3.73, to $12.17, after saying the Securities and Exchange Commission subpoenaed documents on pricing and rebates. Investigators have already probed Bristol-Myers Squibb and Schering-Plough.
Eli Lilly shed $2.30, to $53.70. The patent for Lilly's schizophrenia drug, Zyprexa, may be under a greater-than-expected threat from a rival's court challenge, according to an analyst at UBS Warburg.
Bristol-Myers, which will restated sales and profits for 1999 through 2001 after it improperly lifted revenue with discounts to wholesalers, slid $1.01, to $21.50. Pfizer, the world's biggest drugmaker, lost 30 cents, to $29.
UnumProvident, which last month reported a decline in earnings and said federal regulators are probing its accounting practices, plunged $2.03, to $5.97, bringing its slump to 53 percent in the past two days. Moody's Investors Service said it may reduce the largest U.S. disability insurer's credit rating to below investment grade.
Mellon Financial and State Street dropped after Bear Stearns analyst David Hilder reduced his 2003 earnings estimates for the two asset managers.
Hilder said their earnings will be under pressure until the stock market rebounds. He added that slower trading and lower inflows into stock-mutual funds are also hurting results.
Mellon, the owner of Dreyfus mutual funds, fell 60 cents, to $20.30. State Street, the world's largest custodian of assets, declined 43 cents, to $33.17.
Procter & Gamble gained 91 cents, to $80.70, on speculation that the largest U.S. maker of household goods will make an offer to acquire Germany's Wella. Kroger, the largest U.S. grocery chain, rallied 53 cents, to $12.66. Fourth-quarter profit rose 8.7 percent, and the company repeated that earnings, excluding some costs, will be about equal to last year's.
Losses in the U.S. airline industry would grow by $4 billion in the event of a war with Iraq, the Air Transport Association said.
Delta Air Lines tumbled $1.91, to $6.75. The third-largest U.S. airline said it expects negative cash flow from operations in the first quarter amid war fears. The carrier had forecast positive cash flow in quarter.
AMR slumped 82 cents, to $1.59, bringing its two-day loss to 43 percent. AMR's American Airlines, the world's largest carrier, is seeking as much as $2 billion from lenders should it file for bankruptcy protection, the New York Times said, citing an unnamed banker.
Sabre Holdings shed 52 cents, to $15. The biggest U.S. travel-reservations company lowered its first-quarter profit forecast. It now expects earnings of 23 to 36 cents a share, compared with a previous estimate of 41 to 46 cents.
Ford Motor sank 39 cents, to $6.60, after touching a 10-year low of $6.58. Gary Lapidus, a Goldman Sachs analyst, said weakening U.S. auto sales will hit Ford harder than rivals. Lapidus said he expects Ford to cut second-quarter production 10 to 12 percent.
* The New York Stock Exchange composite index fell 29.43, to 4499.64; the American Stock Exchange index rose 3.29, to 819.43; and the Russell 2000 index of smaller-company stocks fell 0.98, to 347.03.
* Declining issues outnumbered advancing ones by 7 to 5 on the NYSE, where trading volume rose to 1.4 billion shares, from 1.21 billion on Monday. On the Nasdaq, decliners outnumbered advancers by 6 to 5 and volume totaled 1.22 billion, up from 1.08 billion.
* The price of the Treasury's 10-year note fell 63 cents per $1,000 invested, and its yield rose to 3.59 percent, from 3.57 percent on Monday.
* The dollar rose against the Japanese yen and the euro. In late New York trading, a dollar bought 117.18 yen, up from 116.94 late Monday, and a euro bought $1.1031, down from $1.1045.
* Light, sweet crude oil for April delivery settled at $36.72, down 55 cents, on the New York Mercantile Exchange.
* Gold for current delivery fell to $350.50 a troy ounce, from $354.70 on Monday, on the New York Mercantile Exchange's Commodity Exchange.