* Microsoft shares hit their lowest since 1998
* Data on U.S. jobless, housing fuel worries over economy
* Apple jumps after profit beats expectations
* Dow off 1.3 pct, S&P off 1.5 pct, Nasdaq off 2.8 pct
* For up-to-the-minute market news, click []
(Updates to close)
By Chuck Mikolajczak
NEW YORK, Jan 22 (Reuters) - U.S. stocks slid on Thursday,
after Microsoft's <MSFT.O> proposed job cuts and disappointing
earnings shook investors, while economic data showed further
deterioration in the labor and housing markets.
Microsoft Corp's stock fell nearly 12 percent at one point
in the session to its lowest level since 1998 and was among
the top drags on both the Dow and Nasdaq, after the world's
largest software maker said it would cut up to 5 percent of
its estimated work force over the next 18 months. The company
cautioned that it could no longer offer profit forecasts for
the rest of the fiscal year after posting a quarterly profit
that fell short of expectations. For more details, see
[]. The tech bellwether shook up Wall Street by
releasing its earnings before the opening bell, instead of
after the close as expected.
"There's just no good news out there. Microsoft pulled the
rug out from under us," said Joe Saluzzi, co-manager of
trading at Themis Trading in Chatham, New Jersey.
"Wall Street hates surprises -- don't surprise us like
that."
Wall Street briefly pared losses late in the session after
comments from the White House that it is committed to moving
as quickly as possible on a stimulus package and that
President Barack Obama's administration will do everything
possible to restore growth and normalize the markets.
[]
The Dow Jones industrial average <> fell 105.30
points, or 1.28 percent, to 8,122.80. The Standard & Poor's
500 Index <.SPX> dropped 12.74 points, or 1.52 percent, to
827.50. The Nasdaq Composite Index <> slumped 41.58
points, or 2.76 percent, to 1,465.49.
Microsoft traded as low as $17.07, the lowest price since
January 1998, and its largest percentage drop since November
2000. Microsoft ended Nasdaq trading down 11.7 percent at
$17.11.
The U.S. economy showed further signs of deterioration on
Thursday as initial weekly claims for jobless benefits rose to
a seasonally adjusted 589,000, and housing starts sank 15.5
percent to a seasonally adjusted annual rate of 550,000 units
-- the lowest on record.
Adding to concerns in the financial sector, former Merrill
Lynch & Co Chief Executive John Thain is leaving Bank of
America Corp <BAC.N>, which recently acquired Merrill, a Bank
of America spokesman said. [] His departure, which
is effective immediately, came less than a week after Bank of
America took $20 billion of government capital to help absorb
Merrill's losses.
Bank of America's stock stumbled 14.5 percent to $5.71.
Investors were not appeased by the Senate Finance
Committee's backing of Timothy Geithner, President Barack
Obama's nominee for U.S. Treasury secretary. The panel's
approval cleared the way for a full Senate confirmation vote.
However, the process could be delayed until next week if
Republicans object.
"We are basically leaderless in Treasury," said Tim
Ghriskey, chief investment officer of Solaris Asset Management
in Bedford Hills, New York. "It's an overhang right now and we
need some leadership."
Geithner is widely expected to be confirmed by the Senate
as one of Obama's leading players on the team that will tackle
the U.S. recession.
Shares of long-term disability insurer Aflac Inc <AFL.N>
lost more than a third of their value after a Morgan Stanley
analyst expressed concern about the company's holdings of
hybrid securities issued by European financial institutions.
Aflac plunged nearly 37 percent to $22.90 on the NYSE.
In contrast to Microsoft, Apple Inc <AAPL.O> shares rose
6.7 percent to $88.36 on Nasdaq a day after the iPhone maker
reported stronger-than-expected earnings and gave a solid
outlook for the current quarter, despite the weak economy.
Trading volume was moderate on the New York Stock
Exchange, with about 1.56 billion shares changing hands,
slightly above last year's estimated daily average of roughly
1.49 billion, while on Nasdaq, about 2.31 billion shares
traded, roughly equal to last year's daily average of 2.28
billion.
Declining stocks outnumbered advancers on the NYSE by a
ratio of 7 to 2, while on the Nasdaq, about three stocks fell
for every one that rose.
(Additional reporting by Rodrigo Campos; Editing by Jan
Paschal)
