* Valeant sinks after Citron report, drags Allergan
* GM, Boeing rise after strong results
* Ferrari up on debut
* Dow down 0.3 pct, S&P down 0.6 pct, Nasdaq down 0.8 pct (Adds eBay up after the bell, Community Health down, latest volume)
By Caroline Valetkevitch
Oct 21 (Reuters) - U.S. stocks fell on Wednesday as a sharp drop in Valeant Pharmaceuticals hit the healthcare space, while the energy sector dropped along with oil prices.
Valeant Pharmaceuticals' U.S.-listed shares plunged to an intraday low of $88.50 on record volume after a short-seller accused the company of using specialty pharmacies to inflate its revenue.
The company denied the allegation, and later investor Bill Ackman said he increased his Valeant stake by about 2 million shares. The stock pared losses to end down 19.2 percent at $118.61, still its lowest level since October 2014. It lost about $9.6 billion in market capitalization.
The news also dragged down shares of other healthcare names including Allergan, down 1.7 percent at $259, and Endo International, down 13.3 percent at $54.46, though both companies tried to ease concerns about their use of specialty pharmacies.
Also in the healthcare space, insurers Aetna, Humana , Anthem and Cigna all fell at least 3 percent after Democratic presidential candidate Hillary Clinton said she had "serious concerns" about the mergers the companies were proposing.
A drop in crude oil prices weighed on the S&P 500 energy sector, which fell 1 percent. That led sector declines for the S&P 500, followed by materials, down 0.9 percent, and S&P health care, also down 0.9 percent.
"Oil inventories were up quite a bit, so energy was down and that weighed down the market early. Going into the afternoon, the buyers were just lined up to watch as we drifted lower into the the close," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.
The Dow Jones industrial average fell 48.5 points, or 0.28 percent, to 17,168.61, the S&P 500 lost 11.83 points, or 0.58 percent, to 2,018.94 and the Nasdaq Composite dropped 40.86 points, or 0.84 percent, to 4,840.12.
Adding to the negative tone, Yahoo shares fell 5.2 percent to $31.12, a day after the Internet company's quarterly earnings and profit missed expectations.
On the plus side, shares of General Motors rose 5.8 percent to $35.42, while Boeing rose 1.7 percent to $141.19, after both industry heavyweights reported better-than-expected results.
Ferrari was up 5.8 percent at $55 in its debut on the New York Stock Exchange.
Stocks have mostly gained this month following a sharp selloff in the third quarter. The S&P 500 is up more than 5 percent for the month so far.
After the bell, shares of eBay rose 8.4 percent to $26.25 following its results, while shares of Community Health Systems dropped 15.3 percent to $34.35 after a disappointing outlook. Other hospital operator shares also fell after the bell.
During the session, declining issues outnumbered advancing ones on the NYSE by 2,173 to 888, for a 2.45-to-1 ratio on the downside; on the Nasdaq, 2,066 issues fell and 717 advanced for a 2.88-to-1 ratio favoring decliners.
The S&P 500 posted 27 new 52-week highs and five new lows; the Nasdaq recorded 52 new highs and 82 new lows.
About 6.8 billion shares changed hands on U.S. exchanges, compared with the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data. (Editing by Don Sebastian, Chizu Nomiyama and Bernard Orr)