US STOCKS-Wall Street drops on worries about deep slowdown

                                
 * Wall St drops on liquidation, deep recession fear
                                
 * Forced selling exacerbates losses
                                
 * Energy companies' shares fall with oil price
                                
 * Dow down 3.6 pct, S&P down 3.5 pct, Nasdaq down 3.2 pct
                                
 (Updates to close)
                                
 By Kristina Cooke
                                
 NEW YORK, Oct 24 (Reuters) - U.S. stocks dropped on Friday
in a worldwide sell-off 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.
                                
 It was not the bloodbath many had feared, however, even
though stocks ended at 5-1/2-year lows. In the overnight
hours, selling was so fierce that index futures were halted
until after Wall Street's opening bell.
                                
Stock markets tumbled around the globe on Friday.For more
see [MKTS/GLOB]. The MSCI's all-country world index
<.MIWD00000PUS> dropped 5 percent on more evidence of a sharp
slowdown in Europe and a rash of profit warnings worldwide.
                                
 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.
                                
 Energy companies such as Chevron <CVX.N> also tumbled as
the price of oil <CLc1> slid $3.69 to settle at $64.15 a
barrel on bets the global economic slowdown will cut into
demand for fuel, despite OPEC's decision to cut output.
                                
 "It's been a tumultuous week. There is still a lot of fear
out there about whether there is another shoe to drop, whether
we have seen the lows," said John O'Brien, senior vice
president at MKM Partners LLC in Cleveland. "Most managers, I
think, have been selling positions in order to have cash on
hand. That is definitely a factor."
                                
 "Overseas markets portrayed a horrible opening -- but we
are usually the dog that wags the tail and not the other way
around, so some of that extreme fear eased during our
session."
                                
 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 seen at the
beginning of October, according to Thomson Reuters data.
                                
 The Dow Jones industrial average <.DJI> slid 312.30
points, or 3.59 percent, to 8,378.95, while the Standard &
Poor's 500 Index <.SPX> dropped 31.34 points, or 3.45 percent,
to 876.77. The Nasdaq Composite Index <.IXIC> was down 51.88
points, or 3.23 percent, at 1,552.03. Its session low of
1,493.79 was the Nasdaq's lowest intraday level since May
2003.
                                
 For all three major U.S. stock indexes, Friday's session
marked their lowest closing levels since the spring of
2003.
                                
 It was a painful week, with the Dow falling about 5.4
percent, the Nasdaq down 9.3 percent and the S&P 500 off 6.8
percent.
                                
 Technology shares, including iPod maker Apple <AAPL.O>,
fell on concern about the outlook for profits and consumer
spending. Microsoft <MSFT.O> shed 1.6 percent to $21.96 after
cutting its profit outlook.
                                
 News that Japan's Sony <6758.T> cut its profit forecast in
half and Korea's Samsung <005930.KS> posted a 44 percent drop
in quarterly profit also unsettled investors.
                                
 Tech bellwether IBM Inc <IBM.N> was among the biggest
drags on the Dow, falling 2.7 percent to $82.07, while Apple
<AAPL.O> weighed on the Nasdaq, sliding 1.9 percent to
$96.38.
                                
 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 24.7 percent to
$2.07 after PNC Financial Services Group Inc <PNC.N> said it
would buy the Cleveland-based bank for $5.6 billion.
[ID:nN24512798].
                                
 PNC pushed against the current, gaining 3.5  percent to
$58.88.
                                
 Among energy shares, Chevron <CVX.N> lost 4.3 percent to
$63.91, while Exxon Mobil <XOM.N> gave up 1.9 percent to
$69.04.
                                
 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. [ID:nLO561676].
                                
 Trading was muted on the New York Stock Exchange, with
about 1.58 billion shares changing hands, below last year's
estimated daily average of roughly 1.90 billion, while on
Nasdaq, about 2.65 billion shares traded, above last year's
daily average of 2.17 billion.
                                
Declining stocks outnumbered advancing ones on the NYSE by
about 5 to 1 and by 3 to 1 on the Nasdaq.
 (Editing by Jan Paschal)