Johnson & Johnson lost $39.8 billion in market value Friday, suffering its worst trading day in more than 15 years, after Reuters said the company knew for decades that its baby powder contained asbestos — an allegation the company denied.

J&J said the story was "one-sided, false and inflammatory" and an "absurd conspiracy theory," according to a statement.

Thousands of lawsuits have accused J&J's talc-based baby powder of containing asbestos and causing ovarian and other types of cancers. Investors have expressed some concern over the lawsuits, though J&J has successfully won a number of cases.

Friday's report spooked the Street and drove J&J's shares down 10.04 percent to close at $133 a share, losing about $39.8 billion of its market value. J&J now has a market capitalization of $356.7 billion. The shares recovered somewhat after tumbling as much as 11.9 percent in intraday trading.