* NY manufacturing index and Philly Fed index drop
* JPMorgan's sober assessment of economy hurts stock
* Dow off 0.5 pct, S&P down 0.4 pct, Nasdaq off 0.5 pct
* For up-to-the-minute market news see []
(Updates to midafternoon, changes byline)
By Leah Schnurr
NEW YORK, July 15 (Reuters) - U.S. stocks weakened on Thursday as
more signals the pace of the economic recovery is slowing worried
investors.
An unexpected fall in regional factory activity and a third
straight month of decline in producer prices raised concerns about
deflation, cooling investors' enthusiasm for the strong start to the
earnings season that had lifted stocks off recent lows. For details,
see []
"While it's only one month, to have two regional surveys on the
same day that are pretty weak is not good news for the outlook for
economic growth," said Linda Duessel, market strategist at Federated
Investors in Pittsburgh, referring to data showing a slowdown in
factory activity in New York state and the mid-Atlantic region.
"The debate today is: 'Are we having soft patch? Or are we
heading to a double dip?' Anything that adds more to the argument of
the double dip will put pressure on the market."
Earnings from JPMorgan Chase & Co <JPM.N> also raised concerns
about major banks. Although its quarterly profit beat expectations,
much of the gains came from areas that cannot be a stable source of
income in the future. Its stock dipped 0.02 percent to $40.34.
[]
Meanwhile, a broad overhaul of financial regulation was on its
way to becoming law after it cleared a crucial hurdle in Congress.
[]
The Dow Jones industrial average <> slipped 54.00 points, or
0.52 percent, to 10,312.72. The Standard & Poor's 500 Index <.SPX>
was off 4.83 points, or 0.44 percent, to 1,090.34. The Nasdaq
Composite Index <> eased 10.56 points, or 0.47 percent, to
2,239.28.
But in the options market, trades on exchange-traded funds that
track the S&P 500 Index indicated a short-term bullish sentiment
going into options expiration on Friday.
"We continue to see potential pinning of SPX to the 1100 strike,"
said Scott Fullman, director of derivative investment strategy at WJB
Capital Group.
The S&P Depository Trust <SPY.P>, down 0.3 percent at $109.29,
was seeing pinning potential between the $107 and $110 strikes, he
said.
Pinning is when a stock or index closes at or around its
corresponding at-the-money option strike.
Bank stocks led the way down after JPMorgan's results. Citigroup
Inc <C.N> shares fell 2.4 percent to $4.11 and Bank of America Corp
<BAC.N> dropped 2.6 percent to $15.26, both ahead of their earnings
on Friday. The S&P Financial Index <.GSPF> slid 0.9 percent.
Advanced Micro Devices Inc <AMD.N> and Google Inc <GOOG.O> will
both report quarterly results after the closing bell. AMD was off 0.5
percent at $7.40, while Google was flat.
Alcoa <AA.N> and Intel <INTC.O> began the earnings reporting
season this week with strong results.
In a busy day for economic news, the Philadelphia Federal Reserve
Bank said factory activity in the mid-Atlantic region fell
unexpectedly, while the New York Federal Reserve Bank said New York
manufacturing hit the lowest since December 2009.
The U.S. Labor Department said the Producer Price Index declined
for a third straight month. In June, the PPI fell 0.5 percent
compared with the dip of 0.1 percent expected by economists polled by
Reuters.
(Additional reporting by Angela Moon; Editing by Jan Paschal)
