* S&P lowers GE's credit outlook to "negative"
* Energy sector slides as price of oil drops near $36
* Jefferies' downgrade of Intel hits Nasdaq
* Dow down 2.5 pct; S&P off 2.1 pct, Nasdaq down 1.7 pct
* For up-to-the-minute market news, please click on
[]
(Adds Oracle, Research In Motion earnings after the bell)
By Chuck Mikolajczak
NEW YORK, Dec 18 (Reuters) - U.S. stocks fell for the
second day on Thursday after Standard & Poor's threatened to
strip General Electric of its 'AAA' credit rating and slumping
oil prices crippled energy shares.
General Electric <GE.N> shares tumbled 8.2 percent to
$15.96 and ranked among the top drags on the Dow industrials
after S&P said there is at least a 1-in-3 chance that it will
cut the company's credit rating from the top "AAA" tier in the
next two years. []
"It's certainly not good news for GE and their ability to
borrow," said Michael Cuggino, president and portfolio manager
at Permanent Portfolio Funds in San Francisco. "It just
supports the broad-based economic decline."
Chevron Corp <CVX.N> and Exxon Mobil <XOM.N> were the
biggest drags on the Dow for the second consecutive session as
oil fell almost $4, or about 10 percent, to settle near $36 a
barrel on growing fears of falling demand.
The Dow Jones industrial average <> tumbled 219.35
points, or 2.49 percent, to end at 8,604.99. The Standard &
Poor's 500 Index <.SPX> dropped 19.14 points, or 2.12 percent,
to 885.28. The Nasdaq Composite Index <> fell 26.94
points, or 1.71 percent, to 1,552.37.
The Nasdaq showed the ill effects of a downgrade by
brokerage Jefferies & Co of Intel Corp <INTC.O> and other
semiconductor stocks. [] The Philadelphia
Semiconductor Index <.SOXX> tumbled 5.5 percent.
ORACLE JUMPS LATE
After the close, business software maker Oracle <ORCL.O>
and BlackBerry maker Research in Motion <RIM.TO><RIMM.O>
reported quarterly earnings, which could help lift the Nasdaq
in Friday's trading.
Shares of Oracle shot up 2.6 percent to $17.05 in extended
trade, while Research in Motion's U.S.-listed stock was down
slightly.
The broad S&P 500 gave up just under half of the big gain
it racked up following the Federal Reserve's surprisingly
aggressive interest-rate cut on Tuesday.
The two days of declines put a damper on the market's
attempt to establish a sustainable rally off the recent lows,
but it remains up about 19 percent from its then 11-year
intraday low that it hit on Nov. 21. The S&P 500 remains down
about 40 percent for the year so far.
Investors continue to assess the benefit of the Fed's
record rate cut on Tuesday and a proposed stimulus package
from President-elect Barack Obama.
An S&P index of energy stocks <.GSPE> lost 5.7 percent.
Chevron was down 4.9 percent at $73.03, while Exxon Mobil was
down 5 percent at $77, both on the New York Stock Exchange.
Oil prices tumbled despite OPEC's approval of a record
output cut on Wednesday. U.S. crude for January delivery
<CLc1> fell $3.84 to settle at $36.22 a barrel.
WHEN THE CHIPS ARE DOWN
The slowdown in the personal computer market, with
declining sales of desktops and slowing sales of laptops,
factored into Jefferies' downgrade of Intel's shares to
"underperform" from "buy." The brokerage also slashed its
price target on Intel to $11 from $26.
Intel's stock lost 6.6 percent to $14.26 and ranked as the
heaviest weight on the Nasdaq 100 <>.
Jefferies also downgraded Intel's smaller rival Advanced
Micro Devices <AMD.N> to "underperform" from "hold," along
with a cut in its ratings of seven other semiconductor stocks.
Shares of Advanced Micro fell 2.6 percent to $2.23 on the
NYSE.
Wireless chip maker Qualcomm <QCOM.O> lost 2.8 percent to
$34.12. It was the second-heaviest weight on the Nasdaq 100.
POOR VISIBILITY FOR FEDEX
Investor sentiment also was clouded by cautious corporate
outlooks from a range of companies, including FedEx Corp
<FDX.N> and Ingersoll-Rand <IR.N>.
FedEx, considered an indicator of economic health, was
down 2.1 percent at $62.60 on the NYSE after the package
delivery company reported a rise in quarterly profit. However,
the company said it would not provide an outlook for the third
quarter of 2009 because of "significant economic
uncertainty."[]
Ingersoll-Rand shares dropped 4.7 percent to $15.59 after
the diversified manufacturer cut its fourth-quarter and
full-year 2009 revenue and earnings estimates, citing weakness
in Europe. []
Shares of ailing automaker General Motors <GM.N> dropped
16.3 percent to $3.66.
The White House said it was nearing a conclusion on the
bailout package that Detroit's Big Three automakers are
seeking, even considering an "orderly" bankruptcy, as they
struggle to cope with slumping demand and weakening consumer
spending.
Earlier in the session, economic data on the labor market
came in roughly in line with expectations, along with a survey
from the Federal Reserve Bank of Philadelphia that showed
factory activity in the U.S. Mid-Atlantic region contracted in
December, but at a less severe rate than in the previous
month. []
Volume was low on the New York Stock Exchange, with about
1.42 billion shares changing hands, below last year's
estimated daily average of roughly 1.90 billion, while on
Nasdaq, about 2.11 billion shares traded, below last year's
daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by
a ratio of about 3 to 2. On the Nasdaq, nine stocks fell for
every five that rose.
(Additional reporting by Leah Schnurr and Deepa Seetharaman;
Editing by Jan Paschal)
