Deepening economic slump pummels Wall St.

NEW YORK (Reuters) - Stocks tumbled on Thursday, derailing a four-day run-up in the S&P 500 and the Nasdaq, as investors worried that the recession was deepening after a fresh wave of bleak labor market and housing data.

Bellwethers, including Boeing , down more than 5 percent, led the broad market sell-off.

A day after financials propelled Wall Street to its longest winning streak in two months, insurer Allstate plunged 20 percent after posting a $1.1 billion quarterly loss.

Government reports showed the amount of people filing for unemployment benefits hit a record in mid-January, while orders for durable goods dropped for the fifth straight month in December and new home sales fell to a record low.

"There's no major sign of confidence for stock prices," said Steve Goldman, market strategist at Weeden & Co in Greenwich, Connecticut. "The catalysts to reverse the economic slump are not fully in place yet."

The Dow Jones industrial average <.DJI> slid 180.17 points, or 2.15 percent, to 8,195.28. The Standard & Poor's 500 Index <.SPX> dropped 22.68 points, or 2.59 percent, to 851.41. The Nasdaq Composite Index <.IXIC> shed 40.17 points, or 2.58 percent, to 1,518.17.

Even as the Obama administration pushes ahead with plans to jolt the economy out of recession, investors worried that mounting layoffs, a poor earnings outlook and persistent uncertainty about the financial sector's health would continue to sap confidence.

Of the Dow's 30 components, only three were higher -- diversified manufacturer 3M , up 2.5 percent at $56.83; drug maker Merck & Co , up 0.6 percent at $28.95, and consumer products company Procter & Gamble , up 0.1 percent at $58.26. Merck & P&G are among stocks traditionally deemed as a defensive play in a downbeat economy.

Boeing's stock lost 5.6 percent to $40.79 and ranked as the second-heaviest weight on the Dow industrials, behind Chevron , a day after the jet plane maker posted a disappointing outlook and announced an order cancellation.

Allstate tumbled 20.1 percent to $23.68 and contributed to a 5.4 percent drop in the S&P financial index <.GSPF>.

The energy sector was another big drag as Exxon Mobil shares shed 2.8 percent to $77.02 after Goldman Sachs removed the company from its Americas Buy list. Shares of rival Chevron slid 3.7 percent to $71.05 after saying its 2009 capital spending program will be unchanged from 2008.

Among home builders, shares of Hovnanian Enterprises slid more than 8 percent to $1.75 and Toll Brothers fell 7.1 percent to $17.93. The Dow Jones home construction index <.DJUSHB> tumbled 7.3 percent after sales of new homes fell in December to the lowest annual pace since the Commerce Department started keeping records in 1963.

Tool and home appliance maker Black & Decker posted a better-than-expected quarterly profit, but warned it sees a very weak 2009, and its stock slid 18.4 percent to$31.62.

Stocks' inability to sustain their recent rally marks a major hurdle in the market's attempt to reverse its year-to-date losses, with the benchmark S&P 500 index down more than 5 percent.

Worries that President Barack Obama's $825 billion economic stimulus package could still face a bumpy road also weighed on sentiment 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 shares dropped 2.5 percent to $1.97 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 the biggest drag on Nasdaq after it cut its full-year revenue target on weak demand for cell- phone chips. Its stock fell 5.2 percent to $34.92.

(Reporting by Ellis Mnyandu; Editing by Jan Paschal)

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