* Services sector contraction dampens sentiment
* Bank of America's stock up on plan to repay TARP money
* Dow off 0.8 pct; S&P off 0.8 pct; Nasdaq down 0.5 pct
* For up-to-the-minute market news, click []
(Updates close with Bank of America securities sale after the
bell)
By Caroline Valetkevitch
NEW YORK, Dec 3 (Reuters) - U.S. stocks fell on Thursday
after data showed the vast U.S. services sector unexpectedly
shrank in November and investors worried that Friday's
non-farm payrolls report may show the recovery is sluggish.
Stocks sold off going into the close, led by a slide in
financials, as Bank of America Corp's <BAC.N> massive equity
offering spurred concerns that other banks could sell new
shares and dilute existing shareholders' equity. The S&P
financial index <.GSPF> ended down 2.1 percent. For details,
see []
However, shares of Bank of America, parent of the largest
bank ranked by assets, ended up 0.7 percent at $15.76 on
optimism that its plan to repay $45 billion of government
bailout money will free the bank from government restrictions,
especially on executive pay.
On the data front, the services sector index fell to 48.7,
indicating that this huge component of the U.S. economy had
experienced contraction last month, according to a report from
the Institute for Supply Management.[]
The ISM data hurt sentiment a day before November's
unemployment figures are released in an even more influential
economic report.
"Given ISM today, and given the rally of the last few
days, it may be some nervousness ahead of tomorrow's
unemployment number," said Kurt Brunner, portfolio manager at
Swarthmore Group in Philadelphia, in reference to the malaise
on Wall Street.
"You'll probably see some deterioration in the
unemployment
rate. One would think you're going to get at least some
improvement in the job losses, but it bears being a little
cautious."
Economists polled by Thomson Reuters forecast a drop of
130,000 nonfarm jobs in November in Friday's report and an
unemployment rate holding steady at 10.2 percent.
The Dow Jones industrial average <> dropped 86.53
points, or 0.83 percent, to end at 10,366.15. The Standard &
Poor's 500 Index <.SPX> slipped 9.32 points, or 0.84 percent,
to close at 1,099.92. The Nasdaq Composite Index <> fell
11.89 points, or 0.54 percent, to finish at 2,173.14.
After the bell, Bank of America sold $19.3 billion of
common securities, according to a pricing document sent to
investors. The bank sold 1.286 billion common equivalent
securities at $15 a share. The bank plans to use proceeds from
the securities sale to help repay bailout funds from the
government's Troubled Asset Relief Program, known as TARP.
ROUGH GAME FOR TAKE TWO
In other news after the bell, shares of Take Two
Interactive Software Inc <TTWO.O> dropped 7.5 percent to
$10.10 as the video game publisher warned about its financial
outlook. []
During the session, the S&P 500 broke a three-day winning
streak. With the S&P 500 up 63 percent from a closing low on
March 9, tolerance for disappointing data has worn thin as
investors seek justification for stocks' lofty valuations.
A bright spot was provided by Comcast Corp <CMCSA.O>, up
6.5 percent at $15.91 on Nasdaq after the company struck a
deal to buy a majority stake in NBC Universal from General
Electric Co <GE.N>.
The transaction, once closed, will create a media
superpower. for details [] GE shed 0.4 percent
to $16 on the New York Stock Exchange.
BAD DAY AT THE MALL
Among the day's other most closely watched numbers, U.S.
retailers posted much weaker-than-expected sales for November
in a slow kickoff to the holiday shopping season.
[] .
The Retail HOLDRs ETF <RTH.P> fell 1.2 percent.
Shares of Abercrombie & Fitch Co <ANF.N>, a clothing
retailer that caters to teens, dropped 9.3 percent to $36.21.
Abercrombie & Fitch's November same-store sales slid 17
percent, much worse than the analysts' average view of a 9.3
percent drop.
The stock of U.S. discount chain Target Corp <TGT.N> fell
2.9 percent to $46.35.
Other data on Thursday showed that the number of U.S.
workers filing new claims for unemployment benefits fell last
week, according to a government report, while third-quarter
productivity was slightly less robust than previously thought,
a third report said.
Volume was moderate on the NYSE, with 1.13 billion shares
changing hands, well below last year's estimated daily average
of 1.49 billion. On the Nasdaq, about 2.02 billion shares
traded, below last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by
a ratio of 2 to 1, while on the Nasdaq, about nine stocks fell
for every four that rose.
(Reporting by Caroline Valetkevitch; Additional reporting by
Leah Schnurr; Editing by Jan Paschal)
((caroline.valetkevitch@thomsonreuters.com; +1 646 223 6393;
Reuters
Messaging:caroline.valetkevitch.reuters.com@reuters.net))
