US STOCKS-Flu fears spur Wall St sell-off; futures fall late

                                
 * Airlines, oil fall on flu worries
                                
 * GM to eliminate Pontiac brand; shares rise
                                
 * Dow down 0.6 pct, S&P 500 off 1 pct, Nasdaq off 0.9 pct
                                
 * For up-to-the-minute market news click [STXNEWS/US]
 (Adds futures update, context on Dow, latest Nasdaq volume)
                                
 By Chuck Mikolajczak
                                
 NEW YORK, April 27 (Reuters) - U.S. stocks fell on Monday
on concerns the spreading of a new strain of flu could dampen
optimism about the economy, overshadowing a sweeping overhaul
of General Motors Corp and gains in biotechnology stocks.
                                
 The three major U.S. stock indexes slid in choppy trade as
governments around the world moved to contain the spread of a
swine flu outbreak that has killed up to 149 people in Mexico
and spread to the United States and Canada. For details see
[ID:nN27484099]
                                
 The Amex Airline Index <.XAL> dropped 10.6 percent as
investors worried that travel would be hit hard by the flu
fears. Among the laggards, UAL Corp <UAUA.O>, the parent of
United Airlines, plummeted 14.3 percent to $5.50, while
Continental Airlines Inc <CAL.N> lost 16.4 percent to $11.08.
                                
 Anxiety about the flu hammered the entire transport sector
 and the Dow Jones Transportation Average <.DJT> sank 4.7
percent even as recent data has suggested the recession could
be abating, and quarterly earnings have been less
disappointing than Wall Street expected.
                                
 "The market looks for things to worry about, particularly
when you are up nearly 30 percent from the bottom," said
Warren Simpson, managing director at Stephens Capital
Management in Little Rock, Arkansas.
                                
 The broad S&P 500 on Friday snapped a six-week streak of
gains, although it is up 26.8 percent since hitting a 12-year
closing low on March 9.
                                
 The Dow Jones industrial average <.DJI> fell 51.29 points,
or 0.64 percent, to 8,025.00. The Standard & Poor's 500 Index
<.SPX> dropped 8.72 points, or 1.01 percent, to 857.51. The
Nasdaq Composite Index <.IXIC> shed 14.88 points, or 0.88
percent, to 1,679.41.
                                
 The blue-chip Dow average is up 22.6 percent from the
bear-market closing low on March 9, but remains down 8.6
percent for the year.
                                
 However, the worries were tempered as GM <GM.N> shares
surged 20 percent to $2.04 after the troubled automaker
announced a restructuring that investors hope will keep the
company alive as it tries to secure government funding. For
details see [ID:nN27471653].
                                
 After Monday's closing bell, S&P 500 stock futures <SPc1>
added to losses in after-hours trading as a flu expert from
the World Health Organization confirmed the pandemic alert
level had been raised to Phase 4 from Phase 3.
                                
 On Nasdaq, cell-phone chip supplier Qualcomm Inc <QCOM.O>
was a bright spot, up 4.4 percent at $43.17 after it swung to
a quarterly loss, but raised its full-year revenue target on
signs of market improvement. [ID:nN27201084].
                                
 Chevron Corp <CVX.N> and Exxon Mobil Corp <XOM.N> also
weighed on the blue-chip Dow as June oil futures prices slid
nearly 3 percent on flu worries. Chevron fell 1.8 percent to
$65.41, and Exxon lost 0.7 percent to $66.13.
                                
 In contrast, stocks of drugmakers benefited from the
threat of a flu pandemic triggered by the new swine flu
strain. Gilead Sciences <GILD.O> climbed 3.8 percent to $47.53
on Nasdaq. [ID:nLR144642] The Merrill Lynch Biotech Holders
ETF <BBH.P> rose 2.1 percent.
                                
 The CBOE Volatility Index <.VIX>, viewed as Wall Street's
fear gauge, rose 4.1 percent to 38.32.
                                
 Skittishness over what a government stress test of 19
major U.S. financial institutions might reveal pressured
financial stocks, with the KBW Bank index <.BKX> off 4.9
percent. Wells Fargo & Co <WFC.N> fell 5.1 percent to $20.30
after influential analyst Richard Bove downgraded the bank's
stock to "hold" from "buy."
                                
 Also on the earnings front, Dow component Verizon
Communications Inc <VZ.N>, the No. 2 U.S. phone company,
posted higher-than-expected profits, helped by its purchase of
a smaller rival and growth in cell-phone customers. But
Verizon's shares slipped 1.5 percent to $30.54.
[ID:nN27350207].
                                
  Trading was moderate on the New York Stock Exchange, with
about 1.40 billion shares changing hands, below last year's
estimated daily average of 1.49 billion, while on Nasdaq,
about 2.23 billion shares traded, below last year's daily
average of 2.28 billion.
                                
 Declining stocks outnumbered advancing ones on the NYSE by
2,071 to 975 while on the Nasdaq, decliners beat advancers by
 1,794 to 902.
 (Editing by Jan Paschal)