US STOCKS-Wall St drops on weak jobless, manufacturing data

                                
  
                                
 * Intel to buy McAfee for $7.7 bln; McAfee shares soar
                                
 * Jobless claims rise to 9-month high
                                
 * Regional factory activity at lowest in a year
                                
 * Indexes off: Dow 1.3 pct, S&P 1.3 pct, Nasdaq 1.2 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
  (Updates with Philly Fed data, leading indicators)
                                
 By Angela Moon
                                
 NEW YORK, Aug 19 (Reuters) - U.S. stocks fell on Thursday
after data on jobless claims and regional manufacturing showed
further signs of economic weakness, adding to concerns about
the sustainability of a recovery.
                                
 Major U.S. indexes dropped more than 1 percent after a
report indicated factory activity in the U.S. Mid-Atlantic
region contracted in August to its lowest level in more than a
year. For details, see [ID:N19254823]
                                
 Stocks had opened lower after data showed weekly initial
jobless claims rose to a nine-month high last week.
[ID:nN19350083]
                                
 "If you don't want to call it a full double-dip
(recession), you're certainly in a flat line now. And you're
not seeing any growth," said Joe Saluzzi, co-manager of trading
at Themis Trading in Chatham, New Jersey.
                                
 The Dow Jones industrial average <.DJI> slid 132.29 points,
or 1.27 percent, at 10,283.25. The Standard & Poor's 500 Index
<.SPX> was down 14.57 points, or 1.33 percent, at 1,079.59. The
Nasdaq Composite Index <.IXIC> dropped 26.53 points, or 1.20
percent, at 2,189.17.
                                
 The Nasdaq was also weighed by shares of chipmaker Intel
Corp <INTC.O>, which was down 3.4 percent to $18.91 after it
offered to buy security software maker McAfee Inc <MFE.N> for
about $7.68 billion, or $48 per share. McAfee surged 58 percent
to $47.21. [ID:nN19252526]
                                
 Sears Holdings Corp <SHLD.O> tumbled 7.2 percent to $62.44
after the department store group reported a wider-than-expected
quarterly loss due in part on a lackluster performance by its
Kmart discount chain. [ID:nN19238600]
                                
 Williams-Sonoma Inc <WSM.N> fell 2.5 percent to $27.62,
even after the upscale home goods chain posted a far
stronger-than-expected quarterly profit and boosted its
outlook.
                                
 August options are set to expire on Friday, which could
generate more volume and amplify stock moves as traders adjust
their hedges.
                                
 Such dynamics can lead to pinning, where a stock or index
closes at or around its corresponding at-the-money option
strike.
                                
 Ahead of the expiration, the S&P 500 index has been slowly
moving toward the 1,100 strike, where there have been
indications of a potential pinning, said Scott Fullman,
director of derivative investment strategy at WJB Capital
Group. Indications are also pointing to a likely pinning at the
$110 strike price for the SPDR S&P 500 <SPY.P> fund, he said.
  (Reporting by Angela Moon; editing by Jeffrey Benkoe)