Business and Finance

new york — Stocks fell for a second day Thursday as concern that health care profits will be hurt by a White House overhaul of the medical system offset a rally in banks spurred by the administration’s request for more financial rescue funds.

UnitedHealth Group Inc. and Humana Inc. slid at least 12.8 percent, and Eli Lilly & Co. lost 4.7 percent on concern Obama will cut Medicare payments to insurers and raise rebates drug makers must provide to patients on Medicaid. SLM Corp., known as Sallie Mae, tumbled 31 percent as the president proposed ending its student loan subsidies. JPMorgan Chase & Co. and Wells Fargo & Co. gained more than 6 percent as Obama’s budget proposed as much as $750 billion in new bailout funds.

"You’ve got to be glued to your screen, not only to watch prices, but to see what’s coming out of Washington," said Michael Mullaney, a Boston-based money manager at Fiduciary Trust Co., which oversees $9.5 billion. "The rhetoric out of Washington is going to be the primary driver of the market."

The Standard & Poor’s 500 index decreased 1.6 percent to 752.83 after rising as much as 1.9 percent in early trading. The Dow Jones industrial average lost 88.81 points, or 1.2 percent, to 7,182.08.

Health care stocks in the S&P 500 slid 5.1 percent as a group, the biggest drop since Dec. 1. UnitedHealth tumbled 13 percent to $20.07. Humana sank 19 percent to $23.64. Aetna lost 11 percent to $24.03.

Eli Lilly and Co., whose shares have posted a daily gain only twice in the last three weeks, fell 4.7 percent to $31.04 after saying it would lose "several hundred million" dollars in annual sales if Obama’s health care plan is approved.

Merck & Co paperless payday loans., maker of asthma treatment Singulair, dropped 6.7 percent to $26.04 for the biggest slump in the Dow average.

S&P 500 profits fell 35 percent in the fourth quarter, the biggest decline since records started in 1998. Income is forecast to shrink 33 percent this quarter, Bloomberg data show.

General Motors Corp. had the Dow’s second-steepest loss, tumbling 6.7 percent to $2.38.

SLM, the largest U.S. student lender, tumbled $2.59 to $5.80 for the biggest loss since Oct. 1.

JPMorgan rallied 6.1 percent to $23.05. Wells Fargo added 7.1 percent to $14.40.

American International Group Inc. increased 13 percent to 52 cents. The insurer may get a backstop from the U.S. government to protect against further losses on credit-default swaps, according to a person familiar with the matter. As of Sept. 30, AIG provided protection on more than $300 billion of assets through credit derivatives.

Goldman Sachs Group Inc. and UBS AG strategists cut their year-end forecasts for the S&P 500 on expectations earnings will keep declining. David Kostin at Goldman Sachs lowered his estimate to 940 from 1,100 and said the index may fall as much as 15 percent in "the near term." UBS’ David Bianco cut his prediction to 1,100 from 1,300.

IBM Corp. rose the most in three weeks, adding 3.6 percent to $88.97.

Las Vegas Sands Corp. increased 32 percent to $2.85 for the biggest gain since October. Sanford C. Bernstein & Co. initiated coverage of the casino company with an "outperform" rating.

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