Diet supplement stocks hit amid USPlabs scrutiny

Shares of dietary supplement sellers were hammered Tuesday amid an action by government agencies against a single private company in the industry, USPlabs.

Shares of GNC Holdings (GNC), Vitamin Shoppe (VSI) and Nu Skin Enterprises (NUS) finished the day down 6.4%, 4.9% and 4.5% respectively.

Investors had let their imaginations run ahead of reality preparing for a news conference which began at 3:30 p.m. ET, a half hour before the closing bell. These stocks were swept into speculation that government officials might take a broader look at the vitamin and nutritional supplement industry.

Investors prepared for the worst as word spread that government bodies, including the Department of Justice, were to announce criminal and civil actions related to the promotion and selling of nutritional supplements. It turns out the fear seemed a bit overdone as the Department of Justice only targeted one firm, USPlabs, in its indictment. USPlabs is a private company based in Texas. The indictment did mention "retailers" but no firms were specifically named.

Shares of GNC, Vitamin Shoppe and Nu Skin closed at $29.07, $28.19 and $31.89, respectively.

NUTRITION SUPPLEMENT STOCKS ARE DOWN

Company, symbol, Tuesday % Ch.

GNC, GNC, -16.6%

Vitamin Shoppe, VSI, -8.5%

Nu Skin, NUS, -5.5%

Herbalife, HLF, -4.2%

Medifast, MED, -3.1%

Nature's Sunshine, NATR, 0.5%

Source: S&P Capital IQ

Matt Krantz on Twitter: @mattkrantz.