Wall Street trims losses after White House comments

NEW YORK (Reuters) - Stocks fell on Thursday, but were off their earlier lows after comments from the White House countered disappointing news from Microsoft and economic data that showed further deterioration in the labor and housing markets.

Wall Street pared losses after comments from the White House that they must move as quickly as possible on a stimulus package and that President Barack Obama's administration will do everything possible to restore growth and normalize the markets.

"The stimulus package definitely helps from a psychological standpoint in the near term," said Benjamin Halliburton, managing director at Tradition Capital Management in Summit, New Jersey.

"There is the problem of getting the stimulus into the economy and the speed at which that will occur. so anything they can do to expedite that will be viewed as a positive."

The Dow Jones industrial average <.DJI> fell 112.70 points, or 1.37 percent, to 8,115.40, off its session low at 7,957.14. The Standard & Poor's 500 Index <.SPX> slid 13.29 points, or 1.58 percent, to 826.95, off a session low at 811.29. The Nasdaq Composite Index <.IXIC> dropped 35.92 points, or 2.38 percent, to 1,472.40, off its session low at 1,444.08.

Earlier in the session, Microsoft Corp's stock fell over 11 percent to its lowest level since 1998 and was the heaviest weight on both the Dow and Nasdaq, after the world's largest software maker said it would cut up to 5 percent of its estimated work force over the next 18 months. The company cautioned that it could no longer offer profit forecasts for the rest of the fiscal year after posting a quarterly profit that fell short of expectations. The tech bellwether shook up Wall Street by releasing its earnings before the opening bell, instead of after the close as expected.

Microsoft traded as low as $17.19, the lowest price since January 1998 and its largest percentage drop since April 2006. In late afternoon trading, Microsoft was down 9.8 percent at $17.48.

Adding to concerns in the financial sector, former Merrill Lynch & Co Chief Executive John Thain is leaving Bank of America Corp , which recently acquired Merrill, effective immediately, a Bank of America spokesman said. His departure came less than a week after Bank of America took $20 billion of government capital to help absorb Merrill's losses.

Bank of America's stock slid 12.4 percent to $5.83.

Investors were not appeased by the Senate Finance Committee's backing of Timothy Geithner, President Barack Obama's nominee for U.S. Treasury secretary. The panel's approval cleared the way for a full Senate confirmation vote that could be brought to the floor later on Thursday.

Geithner is widely expected to be confirmed by the Senate as one of Obama's leading players on the team that will tackle the U.S. recession.

The U.S. economy showed further signs of deterioration on Thursday as initial weekly claims for jobless benefits rose to a seasonally adjusted 589,000, and housing starts sank 15.5 percent to a seasonally adjusted annual rate of 550,000 units -- the lowest on record.

In contrast to Microsoft, Apple Inc shares rose 7.2 percent to $88.81 on Nasdaq a day after the iPhone maker reported stronger-than-expected earnings and gave a solid outlook for the current quarter, despite the weak economy.

(Additional reporting by Rodrigo Campos; Editing by Jan Paschal)

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