* Dow Chemical, Kuwait deal collapses
* Nasdaq dragged by large-cap tech companies
* Oil rises above $38 per barrel on Middle East tensions
* Dow off 1.6 pct, S&P off 1.6 pct, Nasdaq off 2.3 pct
* For up to the minute market news, please click on
[].
(Updates to midday, changes byline)
By Deepa Seetharaman
NEW YORK, Dec 29 (Reuters) - Wall Street stumbled on Monday
after a joint venture between Kuwait and Dow Chemical fell
through, threatening one of the larger merger deals of the year
and adding to fears about a faltering global economy.
Dow shares <DOW.N> tumbled to their lowest since 1991 after
Kuwait decided to end a $17.4 billion petrochemical joint
venture amid slumping petrochemical sales and the global
financial crisis. For details, see []
The news ignited worries that the largest U.S. chemical
company would not be able to buy rival Rohm & Haas <ROH.N>,
which Dow agreed to acquire for about $15.3 billion in July.
Rohm & Haas shares fell as much as 25 percent. []
These declines were also exacerbated by light volume,
analysts said. Trading is expected to be light throughout the
week, abbreviated by the New Year's holiday on Thursday.
The increasingly anemic economic data and company news has
prevented a hoped-for year-end rally.
What investors "are grappling with is how long and how deep
of a recession this is going to be and when the sun is going to
go up again," said Kevin Kruszenski, head of listed trading at
KeyBanc Capital Markets in Cleveland.
The Dow Jones industrial average <> was down 129.99
points, or 1.53 percent, at 8,385.56. The Standard & Poor's 500
Index <.SPX> was down 14.10 points, or 1.62 percent, at 858.70.
The Nasdaq Composite Index <> was down 34.94 points, or
2.28 percent, at 1,495.30.
The Nasdaq outpaced the other major indexes, dragged by
large-cap tech companies including Research In Motion <RIM.TO>
<RIMM.O>, which fell 4.7 percent to $38.94 and Microsoft Corp
<MSFT.O>, which shed 1.8 percent to $18.79.
Dow Chemicals and Rohm & Haas were among the biggest losers
by percent on the New York Stock Exchange. Dow was down nearly
20 percent to $15.18, while Rohm & Haas was off about 15
percent to $54.03.
The collapsed joint venture added to concerns about the
chemicals industry, which has been struggling because of
recessions in most developed countries and a sharp slowdown in
emerging economies.
Economic worries overshadowed gains in the energy sector as
oil climbed on concerns that crude supplies could be threatened
by tensions between Israel and the Hamas-ruled Gaza Strip.
Oil prices <CLc1> rose to more than $38 a barrel as Israeli
warplanes hit the Gaza Strip for a third day and Israel
prepared to launch a possible invasion. The offensive has
killed more than 300 Palestinians in the deadliest violence in
the territory in decades. [].
Chevron <CVX.N> and Exxon Mobil <XOM.N> topped the Dow,
while the S&P 500 index of energy stocks rose more than 1
percent. Chevron rose 1.3 percent to $71.28 and Exxon Mobil
edged up 0.5 percent to $77.62.
Analysts noted the rise in energy prices did not bode well
for cash-strapped consumers.
As 2008 winds to a close, investors are looking to the
incoming White House administration to offer another stimulus
package and help usher the country out of a year-long
recession. The broad S&P 500 is down about 40 percent for the
year, putting it behind 1931's 47.1 percent record drop.
President-elect Barack Obama has said signing a major
economic stimulus package will be his priority when he takes
over the presidency on Jan. 20.
Over the weekend, one of Obama's top economic advisors
said financial policy should address both immediate job
creation and longer-term investment needs.
Lawrence Summers, Obama's pick to head the White House
National Economic Council, said spending government money
solely to stimulate consumer spending would be a short-sighted
mistake. [].
(Editing by Tom Hals)
