Wall Street edges lower on economic worries

NEW YORK (Reuters) - Stocks fell on Wednesday as pessimism about the economy overshadowed gains by retailers and a recovery among financials.

Stocks fell as investors worried whether the Fed had any more ammunition left after its bold move on Tuesday to slash borrowing costs to a record low, even zero, while it pledged to use "all available tools" to jumpstart the U.S. economy.

Apple Inc fell 6 percent on concerns over whether the iPod maker had new products in the pipeline after the company said Chief Executive Steve Jobs would not appear at the company's technology conference.

Energy companies also slipped as crude oil fell briefly below $40 a barrel, the first time since July 2004.

Shares of Exxon Mobil fell 1.2 percent to $82.01, while Chevron Corp edged down 1 percent to $78.07.

Financial stocks recouped earlier losses and added to sharp gains a day earlier after an analyst said poor results from Morgan Stanley will likely not be repeated. The call ' helped lift shares of the Wall Street bank by 9 percent, reversing an earlier decline after the bank reported a loss.

"There's a lot of betting on financials taking place right now," said Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California. "There is a feeling that maybe the worst is behind us."

The Dow Jones industrial average <.DJI> fell 79.65 points, or 0.89 percent, at 8,844.49. The Standard & Poor's 500 Index <.SPX> edged down 7.81 points, or 0.86 percent, at 905.37. The Nasdaq Composite Index <.IXIC> slipped 13.73 points, or 0.86 percent, at 1,576.16.

U.S. crude oil futures fell after OPEC agreed on its deepest output cut ever, but dealers said even that may fail to offset slumping world energy demand.

Macy's Inc was among the leading retailers, surging 17 percent after it said it obtained substantially more liquidity from its banks. Shares of Motorola Inc edged up 1.6 percent after the company said it would suspend contributions to the 401(k) worker retirement plan and freeze its pension plan.

The S&P Financials Index <.GSPF> changed course to edge up 0.8 percent after Ladenburg Thalmann's Dick Bove raised his price target on Morgan Stanley. "It is assumed that in the next few quarters, there will be fewer markdowns, operations will improve moderately, and the asset management business will turn profitable," Bove said.

"It is probable that many of the charges in this quarter may not be repeated."

Macy's shares jumped 17 percent to $9.96, while Motorola stock rose 1.6 percent to $4.48.

Food makers General Mills Inc and ConAgra Foods Inc posted higher-than-expected quarterly profits helped by price increases and expense controls. ConAgra shares surged nearly 8 percent, while General Mills stock edged up 0.8 percent.

(Additional reporting by Leah Schnurr and Charles Mikolajzcak; Editing by Kenneth Barry)

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