* Economic deterioration stalls four-day rally
* Jobless claims swell, new home sales plunge
* Dow off 2.7 pct; S&P 500, Nasdaq each off over 3 pct
* For up-to-the-minute market news, click []
(Updates to close)
By Ellis Mnyandu
NEW YORK, Jan 29 (Reuters) - U.S. stocks tumbled on
Thursday, derailing a four-day surge in the S&P and Nasdaq as
poor earnings coupled with a fresh wave of bleak labor market
and housing data heightened fears of a deep recession.
A day after financials propelled Wall Street to its
longest winning streak in two months, insurer Allstate <ALL.N>
plunged 20.7 percent after posting a $1.1 billion quarterly
loss and stirred concerns about more losses on insurers'
books.
Government reports showed the amount of people filing for
unemployment benefits hit a record in mid-January, while
orders for long-lasting goods fell for the fifth straight
month in December and new home sales slid to a record low.
Bellwethers whose profits are sensitive to economic
growth, like Boeing <BA.N>, down nearly 6 percent, led the
broad market sell-off.
"There's no major sign of confidence for stock prices,"
said Steve Goldman, market strategist at Weeden & Co in
Greenwich, Connecticut. "The catalysts to reverse the economic
slump are not fully in place yet."
The Dow Jones industrial average <> slid 226.44
points, or 2.70 percent, to 8,149.01. The Standard & Poor's
500 Index <.SPX> tumbled 28.95 points, or 3.31 percent, to
845.14. The Nasdaq Composite Index <> dropped 50.50
points, or 3.24 percent, to 1,507.84.
Even as the Obama administration pushes ahead with plans
to jolt the economy out of recession, investors feared that
mounting layoffs, a poor earnings outlook and persistent
uncertainty about the financial sector's health would continue
to sap confidence.
Stocks' inability to sustain their recent rally marks a
major hurdle in the market's attempt to reverse its
year-to-date losses, with the benchmark S&P 500 index down
more than 6 percent, the Dow off 7.2 percent, and the Nasdaq
off more than 4 percent.
Of the Dow's 30 components, only three finished higher --
diversified manufacturer 3M <MMM.N>, up 2 percent at $56.55;
drug maker Merck & Co <MRK.N>, up 0.6 percent at $28.94, and
Procter & Gamble <PG.N> , up 0.1 percent at $58.22. Both Merck
and P&G are among stocks traditionally deemed as a defensive
play in a downbeat economy.
Boeing's stock lost 5.9 percent to $40.71 and ranked as
the second-heaviest weight on the Dow industrials, behind
Chevron <CVX.N>, a day after the jet plane maker posted a
disappointing outlook and announced an order cancellation.
Allstate tumbled 20.7 percent to $23.50 and contributed to
an 8.4 percent drop in the S&P financial index <.GSPF>. Among
bank stocks, JPMorgan <JPM.N> slid 8.1 percent to $25.43.
In the last half hour of trading, bank stocks added losses
after U.S. President Barack Obama said large bonuses doled out
to Wall Street executives last year were "shameful," and noted
he would tell the executives to show restraint.
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The energy sector was another big drag as Exxon Mobil
<XOM.N> shares shed 3.1 percent to $76.80 after Goldman Sachs
removed the company from its Americas Buy list, a day before
the major oil company reports earnings. Shares of rival
Chevron slid 4.3 percent to $70.62 after the company said its
2009 capital spending program will be unchanged from 2008.
Among home builders, shares of Hovnanian Enterprises
<HOV.N> slid 10.5 percent to $1.71 and Toll Brothers <TOL.N>
fell 7.5 percent to $17.85. The Dow Jones home construction
index <.DJUSHB> tumbled 8 percent after sales of new homes
fell in December to the lowest annual pace since the Commerce
Department started keeping records in 1963.
Tool and home appliance maker Black & Decker <BDK.N>
posted a better-than-expected quarterly profit, but warned it
sees a very weak 2009, and its stock slid almost 21 percent to
$30.65.
According to Thomson Reuters proprietary research,
fourth-quarter earnings will slide 35.1 percent from a year
ago, marking the largest drop in at least a decade.
Worries that President Obama's $825 billion economic
stimulus package could still face a bumpy road also weighed on
sentiment after the U.S. House of Representatives passed it
late on Wednesday although every Republican who voted opposed
it. The Senate begins debate next week. [].
Qualcomm Inc <QCOM.O> was the biggest drag on Nasdaq after
it cut its full-year revenue target on weak demand for cell-
phone chips. Its stock fell 4.6 percent to $35.13.
Before Friday's opening bell, investors will scrutinize
the government's first snapshot of fourth-quarter gross
domestic product, which measures all goods and services
produced within U.S. borders.
The GDP report, due at 8:30 a.m. (1330 GMT), is expected
to show the economy contracted by at least a 5.4 percent
annual rate in the fourth quarter -- the worst since the first
quarter of 1982.
(Reporting by Ellis Mnyandu; Editing by Jan Paschal)
