* U.K. rating outlook cut weighs on sentiment
* Data shows job market's weakness persists
* Philadelphia Fed's survey worse than expected
* Dow off 1.5 pct; S&P off 1.7 pct; Nasdaq off 1.9 pct
For up-to-the-minute market news click []
(Updates to cite budget deficit as a concern in paragraph 1,
adds latest Nasdaq volume)
By Edward Krudy
NEW YORK, May 21 (Reuters) - U.S. stocks slid in a broad
sell-off on Thursday as investors, concerned about the U.S.
budget deficit, exited dollar-denominated assets across the
board.
Markets came under severe selling pressure as a result of
an outlook downgrade for the U.K.'s triple-A credit rating
heightened fears that the United States, with its increasing
budget deficit and weakened economy, could face a similar
fate.
The activity was unusual in that the sell-off in U.S.
stocks did not produce a flight to assets typically considered
havens in a storm -- notably the U.S. dollar and the U.S.
government bond market. Instead, those markets also weakened
for similar reasons.
Bill Gross, the co-chief investment officer of the huge
bond firm, Pacific Investment Management Co., said fears that
the United States is at risk of losing its AAA credit rating
were hurting all U.S. assets. Gross told Reuters via e-mail
that investors fear the United States is "going the way of the
U.K. -- losing AAA rating, which affects all financial assets
and the dollar" as governments around the world spend billions
to revive growth. (For details, see [])
Shares of big manufacturers dropped, with United
Technologies Corp <UTX.N> falling 1.9 percent to $50.76, while
Boeing Co <BA.N> shed 2.9 percent to $43.29. The big U.S.
aircraft maker left its full-year forecast unchanged on
Thursday.
The Dow Jones industrial average <> dropped 129.91
points, or 1.54 percent, to 8,292.13. The Standard & Poor's
500 Index <.SPX> fell 15.14 points, or 1.68 percent, to
888.33. The Nasdaq Composite Index <> lost 32.59 points,
or 1.89 percent, to 1,695.25.
Elsewhere, U.S. Treasuries plunged after the government
said it would sell a massive amount of new debt next week,
while earlier in the day, the U.S. dollar fell to its lowest
level this year against a basket of currencies.
Investors also beat up technology shares. Apple Inc
<AAPL.O> was the Nasdaq's top drag, down 1.3 percent at
$124.18. Tech companies' fortunes are closely linked to a
growing economy.
U.S. government data showed ongoing claims rose to a fresh
record as the recession battered employment, but the number of
workers filing new claims for jobless benefits declined 12,000
last week. []
The Philadelphia Fed's survey of manufacturing conditions
for the U.S. mid-Atlantic region contracted in May for the
eighth straight month, but the deterioration improved slightly
from April. []
"This market really has jumped on the basis that possibly
the recession could end sometime later this year or early
next year," said Peter Lewis, fund manager at Murphy Capital
Management, in Gladstone, New Jersey.
"But we have to strip away the fact and realize these
reports are still bad, and by no means is this market ready to
take off."
The economic data came one day after the U.S. Federal
Reserve offered a more pessimistic view for economic recovery,
deflating some of the optimism that had underpinned the stock
market's recent rally from 12-year lows in early March.
The S&P rallied 37.4 percent from its bear market closing
low in early March to a peak on May 8, but it has now retraced
some of those gains amid concerns about the economy and a
series of large secondary stock offerings from banks. The
index is now up 31 percent from its low set on March 9.
Trading was moderate on the New York Stock Exchange, with
about 1.44 billion shares changing hands, below last year's
estimated daily average of 1.49 billion, while on Nasdaq,
about 2.25 billion shares traded, below last year's daily
average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by
more than 2 to 1, while on the Nasdaq, almost three stocks
fell for every one that rose.
(Reporting by Edward Krudy; Editing by Jan Paschal)
