* National factory activity data disappoint investors
* Jobless claims rise in latest week
* Tech, bank shares among hardest hit
* Dow off 2.1 pct, S&P off 2.6 pct, Nasdaq off 3.1 pct
* For up-to-the-minute market news, click []
(Updates to close)
By Caroline Valetkevitch
NEW YORK, Oct 1 (Reuters) - The Dow and S&P 500 suffered
their worst one-day fall in three months on Thursday after
economic reports fueled fears about the recovery's strength.
The pullback occurred a day after stocks ended the third
quarter with strong gains, with the Dow and S&P each up 15
percent from the previous quarter.
Cyclical stocks, which are sensitive to the economy's
cycles, were among the worst performers, including technology
and bank shares. The KWB bank index <.BKX> dropped 5 percent
while an index of semiconductors <.SOXX> fell 4.8 percent.
Airlines also fell sharply, with an airline index <.XAL> down
8.3 percent.
The Institute for Supply Management's index of national
factory activity declined in September from August's reading,
and although the latest reading still indicated growth, it was
sharply below economists' forecast in a Reuters poll. For
details, see [] Please see graphic:
http://graphics.thomsonreuters.com/109/US_ISMGDP1009.gif
Data on jobless claims also was worse than expected.
"There was disappointment from the ISM this morning. It
missed expectations," said Mike O'Rourke, chief market
strategist at BTIG in New York.
"With the last quarter ending, a lot of people were
holding stuff up for window dressing and now you're seeing
profit-taking," he added. "We've had a tremendous run up."
Analysts said the news added to anxiety ahead of Friday's
September jobs report from the government, the month's biggest
data release.
The Dow Jones industrial average <> tumbled 203.00
points, or 2.09 percent, to end at 9,509.28. The Standard &
Poor's 500 Index <.SPX> slid 27.23 points, or 2.58 percent, to
1,029.85. The Nasdaq Composite Index <> lost 64.94
points, or 3.06 percent, to 2,057.48.
It was the third straight day of declines for stocks and
the Nasday's worst fall since June 22, just before the market
suffered a modest pullback.
All 30 Dow components finished in the red, with the Dow's
biggest decliners including JPMorgan Chase & Co <JPM.N>, down
5.6 percent at $41.37, and Boeing Co <BA.N>, down 3.8 percent
at $52.11.
Bank of America Corp <BAC.N> shares slipped 4.2 percent to
$16.21 after Chief Executive Ken Lewis said he was retiring
after months of being dogged by a series of government
investigations into the company's acquisition of Merrill
Lynch. The company did not name a successor. The news was
announced late on Wednesday. []
Heavy equipment maker Caterpillar <CAT.N>, down 3.7
percent at $49.45, also ranked among the Dow's biggest
decliners.
Among the Nasdaq's major losers were tech bellwethers
Apple Inc <AAPL.O>, down 2.4 percent at $180.8599; Qualcomm
Inc <QCOM.O>, down 5.1 percent at $42.70 and Microsoft
<MSFT.O>, down 3.3 percent at $24.88.
The ISM's manufacturing reading fell to 52.6, below
economists' forecast of 54.0, and August's 52.9.
The S&P 500, however, is still up 52.2 percent from its
12-year closing low on March 9.
(Editing by Jan Paschal)
