* Optimism over China stimulus plan fades
* Worries about GM's future hurt sentiment, stock plunges
* Starbucks' shares fall 3 percent after the bell
* Dow down 0.8 pct, S&P 500 off 1.3 pct, Nasdaq off 1.9 pct
(Updates close with Starbucks sliding after the bell)
By Kristina Cooke
NEW YORK, Nov 10 (Reuters) - U.S. stocks fell in tepid
volume on Monday, as investors worried about the outlook for a
raft of companies from General Motors <GM.N> to Goldman Sachs
<GS.N> in a harsh economic environment, stifling early
enthusiasm for a Chinese stimulus plan.
The financial sector led the way lower after Barclays
Capital analysts said they expect Goldman Sachs to post a
quarterly loss for the first time in its history due to steep
equity market declines. Goldman's shares lost more than 8
percent.
Dow component GM's shares, meanwhile, fell to 62-year lows
after Deutsche Bank lowered its equity value on the automaker
to zero and a number of brokerages warned that GM and its
rivals are burning through cash fast.
"It's ugly out there and it's not going to be over
tomorrow. It's going to take some time," said Kurt Brunner,
portfolio manager at Swarthmore Group in Philadelphia,
Pennsylvania. "Talk on the Street about Goldman's numbers, the
latest analyst comments on GM -- there was just a whole lot of
negative corporate news today. Investors are still really
nervous."
Stocks worldwide initially rose after China approved a
$586 billion government spending package and said it would
adopt a "moderately easy" monetary policy. But the euphoria
fizzled fast in the United States as investors were inundated
with negative headlines.
The Dow Jones industrial average <> fell 73.27 points,
or 0.82 percent, to 8,870.54, while the Standard & Poor's 500
Index <.SPX> dropped 11.78 points, or 1.27 percent, to 919.21.
The Nasdaq Composite Index <>was down 30.66 points, or
1.86 percent, at 1,616.74.
After October's drubbing, stocks have made effectively no
headway in November, and traders noted volume has been fairly
light so far this month.
Trading was low on the New York Stock Exchange, with about
1.14 billion shares changing hands, well below last year's
estimated daily average of roughly 1.90 billion, while on
Nasdaq, about 1.71 billion shares traded, also falling short
ot last year's daily average of 2.17 billion.
Also notable was the absence of a sharp last-minute
sell-off, which had been a hallmark of down days during
October's extreme volatility. In fact, major benchmarks cut
some of their losses heading into the close on Monday.
But the grim news continued after hours, with shares of
coffee chain Starbucks Corp <SBUX.O> falling more than 3
percent after its quarterly results fell short of
expectations.
BIGGER BAILOUT
Another piece of worrisome news for the beleaguered
financial sector that darkened Monday's session was that the
cost of rescuing American International Group Inc <AIG.N>
jumped to $150 billion after a smaller bailout failed to
stabilize the ailing insurance giant.
Google <GOOG.O> shares weighed on the Nasdaq after
Barclays Capital cut its fourth-quarter revenue estimates on
the Web search leader and lowered its price target on the
stock, citing further macro weakness. Google shares fell 3.7
percent to $318.78.
Adding to the market's jitters, major electronic retailer
Circuit City <CC.N> was forced into bankruptcy just weeks
before the holiday shopping season.
Goldman Sachs shares lost 8.5 percent to $71.21 on the
NYSE after Barclays analysts said they expected the bank to
post a fourth-quarter loss of $2.50 per share.
GM's stock plummeted 22.9 percent to $3.36, dragging
along rival Ford <F.N>, whose shares declined 4.5 percent to
$1.93. On Friday, both companies posted wider-than-expected
quarterly losses.
China's economic stimulus involves new government
spending between now and 2010 and would focus largely on
infrastructure and social projects. For details, see
[].
McDonald's Corp <MCD.N> helped the Dow fare better than
the S&P 500 and Nasdaq. The world's largest hamburger chain
said global sales at its fast-food restaurants open at least
13 months rose 8.2 percent in October, topping analysts'
targets.
McDonald's shares rose 1.8 percent to $56.48.
The U.S. bond market closed early on Monday, ahead of the
Veterans Day holiday when it will be shut. The U.S. stock
market will be open as normal on Tuesday.
Declining stocks outnumbered advancing ones on the NYSE by
more than 2 to 1 and on Nasdaq by about 5 to 2.
(Reporting by Kristina Cooke; Editing by Jan Paschal)
