* Economic contraction, poor earnings roil Wall Street
* Financials fall on bank rescue plan uncertainty
* Indexes down 2 percent
* For up-to-the-minute market news, click []
(Updates to early afternoon)
By Ellis Mnyandu
NEW YORK, Jan 30 (Reuters) - U.S. stocks closed out their
worst January ever with another slide on Friday after data
showed the economy contracted at the fastest pace in nearly 27
years in the fourth quarter.
Uncertainty about the fate of a plan by the Obama
administration to relieve banks of money-losing assets added
to the bearish tone, with Citigroup <C.N> plunging 9 percent
and Bank of America <BAC.N> dropping 3 percent.
Procter & Gamble Co <PG.N>, the maker of Pampers diapers,
Gillette razors and Tide laundry detergent, was the Dow's top
drag, sliding 6.4 percent, after its quarterly profit missed
expectations. P&G also added its name to a growing list of
companies cutting outlooks. For more see [].
"We're in for another tough year," said Dean Barber,
president of investment firm Barber Financial Group in Kansas
City.
"You have consumer sentiment at an all-time low, job
losses that have exceeded the total number of job losses in
the '81-'82 recession, we're 13 months into the latest
recession, so people feel bad."
The Dow Jones industrial average <> fell 148.15
points, or 1.82 percent, to 8,000.86. The Standard & Poor's
500 Index <.SPX> slid 19.26 points, or 2.28 percent, to
825.88. The Nasdaq Composite Index <> tumbled 31.42
points, or 2.08 percent, to 1,476.42.
Both the Dow and the benchmark S&P 500 <.SPX> suffered
their worst January ever, with the Dow down 8.8 percent and
the S&P down 8.6 percent. The Nasdaq dropped 6.4 percent in
January.
January performance traditionally serves as a harbinger
for stocks for the rest of the year.
Analysts said the sharp declines in the shares of
companies traditionally considered better positioned to ride
out an economic downturn underscored the severity of the
pessimism.
Procter & Gamble Co <PG.N> tumbled $3.72 to $54.50 on the
New York Stock Exchange.
Kraft Foods Inc <KFT.N> slid 4.2 percent to $28.05, making
the food maker the third worst drag on the Dow, behind 3M Co
<MMM.N> , a diversified manufacturer.
3M shares fell almost 5 percent to $53.79 after Barclays
and JPMorgan analysts cut their price targets, a day after the
company posted a drop in fourth-quarter profit and sales.
Among financial stocks, shares of Citigroup <C.N> slid 9
percent to $3.55, while shares of Bank of America <BAC.N>
dropped 3 percent to $6.58. The S&P financial index <.GSPF>
fell 2.5 percent.
U.S. policy-makers have yet to reach a consensus on how a
U.S. government-run bad bank would work and the idea may not
move forward, CNBC television reported, citing unnamed
sources. For details, see []
The Nasdaq's decline was led by a 3.1 percent slide in
Apple <AAPL.O> shares to $90.13, and was only partly offset by
a jump of 17.6 percent in Amazon.com <AMZN.O> to $58.82,
following the online retailer's rosy outlook and holiday
sales.
Another standout loser was Juniper Networks <JNPR.O>, down
more than 16 percent at $14.16, after the network equipment
provider warned its first-quarter revenue and profit would
fall far short of Wall Street's expectations.
Companies in the basic materials sector also sold off,
sparking a 3.7 percent slide in the S&P materials index
<.GSPM>. Aluminum producer Alcoa Inc <AA.N> shed 7.7 percent
to $7.79.
(Editing by Jan Paschal)
