Economic worry sends Wall St. lower

NEW YORK (Reuters) - Stocks fell on Thursday as investors grew increasingly worried that government efforts may not be enough to revive a recession-weary economy and steady the banking system.

Although Congress prepared to pass a $789 billion economic stimulus package as early as Thursday, uncertainty about the economy fueled a broad-based sell-off.

JPMorgan , down 4.4 percent, was among the top drags on the Dow Jones industrials, while 3M fell 3.6 percent.

"Nobody has confidence in the plan at all," said Tim Ghriskey, Chief investment officer of Solaris Asset Management in Bedford Hills, New York. "All of us are looking for action and details and I think that lack of visibility, that lack of transparency, is critical here. That is overhanging the markets."

"The markets hate the unknown and right now we have a lot of uncertainty."

The Dow Jones industrial average <.DJI> dropped 223.25 points, or 2.81 percent, to 7,716.28. The Standard & Poor's 500 Index <.SPX> fell 23.36 points, or 2.80 percent, to 810.38. The Nasdaq Composite Index <.IXIC> shed 30.14 points, or 1.97 percent, to 1,500.36.

Bright spots on the Nasdaq including gains in biotechnology companies, including Genzyme and Life Technologies after the latter reported its quarterly earnings.

The AMEX Biotechnology index <.BTK > rose 1.5 percent.

The decline in the S&P 500 pushed it to near three-month lows earlier in the session, even though the index is still up more than 10 percent from the bear-market intraday low set in November 21.

Adding to dour mood, rating agency Moody's Investors Service said the top "AAA" credit rating of the United States was "being tested" as the current crisis continues to pressure growth.

The KBW Bank index <.BKX> was pinned near session lows, down nearly 9 percent. Investors have grown increasingly wary about the government's plan to cleanse the financial sector of toxic assets that have constrained lending while the recession deepens.

The S&P financial index <.GSPF> was off 7 percent.

Standout decliners among banks included Citigroup down 4.6 percent to $3.52; Wells Fargo , off nearly 11 percent at $15.59, and Bank of America down 11.2 percent to $5.39.

Government data showing that the number of people staying on unemployment benefits after drawing an initial week of aid hit a record in the last week of January, which underscored the toll of the 14-month-old recession on the labor market.

On the upside, Coca-Cola Co , up 5.8 percent at $43.86, was the lead positive stock on the Dow after posting a solid quarterly profit.

Apple ranked as the top gainer on Nasdaq, up 2.5 percent to $99.22.

Genzyme rose 1.5 percent to $72.11 while Life Technologies jumped 7.5 percent to $30.12.

(Editing by Tom Hals)

WhatsAppFacebookTwitterLinkedinBeloudBluesky