Wall Street slides on earnings, economic gloom

NEW YORK (Reuters) - Stocks fell on Thursday on more dismal earnings from companies including Allstate, and a bleak batch of economic data showed an economy still in the grips of a recession.

Allstate Corp shed nearly 20 percent to $23.80 after the largest publicly traded U.S. home and auto insurer posted a hefty loss on soured investments. Allstate helped drag the S&P financial index <.GSPF> down more than 5 percent.

Shares of widely held Dow component Exxon Mobil were down 1.8 percent at $77.79 after Goldman Sachs removed the company from its Americas Buy list, saying it saw better investment opportunities among energy companies at this time.

Data showed jobless rolls hit a record peak, while new orders for durable goods dropped in December for the fifth straight month and sales of newly built U.S. single-family homes slumped to their lowest since records started in 1968, highlighting the deepening slowdown.

"The numbers are very weak across the board," said Michael Darda, chief economist at MKM Partners LLC in Greenwich, Connecticut.

"All the data through December is reflecting the credit shock that occurred through the fall, and it is indicative of an economy that is contracting at a very rapid pace."

The Dow Jones industrial average <.DJI> was down 121.15 points, or 1.45 percent, at 8,254.30. The Standard & Poor's 500 Index <.SPX> fell 17.10 points, or 1.96 percent, to 856.99. The Nasdaq Composite Index <.IXIC> lost 29.84 points, or 1.91 percent, to 1,528.50.

Job losses have been at the forefront this week as more companies make massive cuts in an effort to stay afloat.

Sales of new homes saw the largest monthly decline since 1994. Analysts believe a stabilization in home sales and prices is necessary before the economy can begin to recover.

Worries that President Barack Obama's $825 billion economic stimulus package could still face a bumpy road also weighed after the U.S. House of Representatives passed it late on Wednesday although every Republican who voted opposed it.

The Senate begins debate next week.

Ford Motor Co was down 2.2 percent at $1.99 after reporting a deeper-than-expected loss, but the ailing automaker said it would have enough cash to go ahead without government loans.

Qualcomm Inc was among the biggest drags on the Nasdaq after it cut its full-year revenue target on weak demand for cell phone chips. Its shares gave up 6.6 percent at $34.40.

The declines put an end to a four-day rally for the broad S&P 500 that was its longest run-up in two months. So far this year, the index is down close to 5 percent, but it is still up about 14 percent from 11-year lows seen in late November.

(Additional reporting by Ryan Vlastelica; Editing by James Dalgleish)

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