* Wall St drops on liquidation, deep recession fear
* Dow and S&P 500 down 4 percent, Nasdaq off 3 pct
* Forced selling exacerbates losses
* Energy companies' shares fall with oil price
(Updates to afternoon, changes byline)
By Kristina Cooke
NEW YORK, Oct 24 (Reuters) - U.S. stocks tumbled on Friday
in a worldwide selloff with investors cashing out of stocks as
signs mounted that the global economic slowdown could be deeper
than feared and the corporate profit outlook darkened.
Forced liquidations by hedge funds and mutual funds to
raise cash to meet large-scale redemptions by investors made
the losses even steeper, analysts said.
Stock markets tumbled around the globe on Friday.
For more see [].
By afternoon trading in New York, the MSCI's all-country
world index <.MIWD00000PUS> was down 5.6 percent on more
evidence of a sharp slowdown in Europe and a rash of profit
warnings worldwide.
The sell-off on Wall Street did not, however, live up to
investors' worst fears after selling in index futures before
the marked opened was so severe that trading was halted.
Bellwether IBM Inc <IBM.N> was among the biggest drags on
the Dow, falling 3.5 percent to $81.39, while Apple <AAPL.O>
weighed on the Nasdaq, sliding 4.6 percent to $93.74.
Energy companies such as Chevron <CVX.N> also tumbled as
the price of oil <CLc1> slid $3.84 to $64 a barrel on bets the
global economic slowdown will cut into demand for fuel.
Estimates for S&P 500 third-quarter earnings growth fell
further, with analysts on average expecting an 11 percent
decline -- sharply below the 2.9 percent decline expected at
the beginning of October, according to Thomson Reuters data.
"They're again looking at the global situation and seeing
that it is deteriorating and the implication for earnings and
investment opportunities is bleak," said Bucky Hellwig, senior
vice president at Morgan Asset Management in Birmingham,
Alabama.
"The continual liquidations of holdings from hedge funds as
they raise cash for required and anticipated withdrawals is
fueling the selling."
The Dow Jones industrial average <> dropped 435.91
points, or 5.02 percent, to 8,255.34, while the Standard &
Poor's 500 Index <.SPX> slid 46.21 points, or 5.09 percent, at
861.90. The Nasdaq Composite Index <> was down 66.14
points, or 4.12 percent, at 1,537.77. Its session low of
1,493.79 was the index's lowest intraday level since May 2003.
U.S. bank shares fell on fears that losses from bad loans
will soar due to a deep global recession, and as National City
a large, ailing U.S. bank, agreed to be acquired at a
below-market price.
Shares of National City Corp <NCC.N> slid 26.9 percent to
$2.01 after PNC Financial Services Group Inc <PNC.N> said it
would buy the Cleveland-based bank for $5.6 billion.
[]. PNC pushed against the current, gaining 1.1
percent to $57.52.
Technology shares, including iPod maker Apple, fell on
concern about the outlook for profits and consumer spending.
News that Japan's Sony <6758.T> halved its profit forecast and
Korea's Samsung <005930.KS> posted a 44 percent drop in
quarterly profit also unsettled investors.
Among energy shares, Chevron <CVX.N> lost 7.5 percent to
$61.75 while Exxon Mobil <XOM.N> gave up 4.8 percent to
$67.04.
Before the market opened, stock futures fell so steeply
they had to be frozen after triggering a limit down. Losses at
the open were not as severe, however, and by midday, stocks had
come off their lows before turning lower once again.
"Amazingly enough, we're not down more than this," said
David Henderson, NYSE floor member and president of Raven
Securities Corp, on the exchange floor.
"The market is showing some signs that there are value
buyers out there."
Data showing the British economy shrank 0.5 percent in the
third quarter, the first contraction in 16 years and
substantially more than expected, fueled global economic
concerns. [].
(Additional reporting by Jonathan Spicer; Editing by James
Dalgleish)
