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Stocks slide as investors worry about US economy

Stocks slide as investors worry about US economy

Investors' concerns about the U.S. economy aren't letting up even as Congress has reached a deal on a $789 billion economic stimulus plan.
Stocks plummeted early Thursday as a surprise jump in retail sales failed to lift the market's downcast mood. Investors looked past the stimulus plan and economic reports to cautious earnings forecasts and lingering questions about the health of the banking sector.
After an intense focus on Washington this week on the stimulus plan and the Treasury Department's revision to its financial rescue plan, investors find little reason to be optimistic.
Investors remain concerned about the prospects for businesses and are hoping the stimulus plan's mix of spending and tax cuts will be able to help revive an economy mired in its worst recession in generations. But the plan, if passed, likely won't help immediately.
The House could vote on the measure as soon as Thursday, though Friday seemed more likely. The Senate would follow.
"The stimulus bill looks like a little bit of a wet blanket," said Randy Frederick, director of trading and derivatives at Charles Schwab. "There is some concern that maybe this thing won't work as well as expected."
In midmorning trading, the Dow Jones industrial average fell 188.20, or 2.37 percent, to 7,751.33.
Broader stock indicators also slid. The Standard & Poor's 500 index fell 18.88, or 2.26 percent, to 814.86, and the Nasdaq composite index fell 20.36, or 1.33 percent, to 1,510.14.
The Russell 2000 index of smaller companies fell 6.99, or 1.56 percent, to 440.96.
The Commerce Department said retail sales jumped 1 percent in January, the biggest increase in 14 months. Economists polled by Thomson Reuters had expected sales would fall 0.8 percent. Sales tumbled 2.7 percent in December, which had the weakest holiday selling season since at least 1969.
The department also said businesses cut inventories 1.3 percent in December, the biggest reduction in seven years. The 1.3 percent drop in December was far steeper drop than the 0.9 percent decline analysts had expected.
The Labor Department said first-time claims for unemployment benefits dropped to a seasonally adjusted 623,000, from an upwardly revised figure of 631,000 the previous week. The total came in above the 610,00 claims analysts had been expecting.
And the number of people still continuing to seek unemployment benefits rose to 4.81 million from 4.78 million, the highest since records began in 1967. Wall Street had expected the number would total 4.8 million.
Investors remained cautious after a moderate gain in stocks Wednesday. The advance did little to offset the market's slide of more than 4 percent Tuesday on worries about the government's latest plans to overhaul the second half of its $700 billion financial rescue fund.
Declining issues outnumbered advancers by about 6 to 1 on the New York Stock Exchange, where volume came to 235.3 million shares.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.77 percent from 2.76 percent late Wednesday. The yield on the three-month T-bill rose to 0.30 percent from 0.29 percent.
Health insurer Aetna Inc. posted a 57 percent drop in its fourth-quarter earnings as health care costs increased and the company sustained large capital losses. Aetna fell $1.15, or 3.6 percent, to $31.09.
Marriott International Inc. fell 42 cents, or 2.8 percent, to $14.74 after the hotel chain reported it lost $10 million in its fourth quarter as revenue slipped and it absorbed restructuring and timeshare charges.
Not all the news was unwelcome.
Coca-Cola Co. said its fourth-quarter earnings fell 18 percent as it grappled with the global recession and volatility in the currency markets. But the company's adjusted earnings topped Wall Street's forecast and the company said its case volume grew. The stock rose $1.98, or 4.8 percent, to $43.25.
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Updated : 2021-10-19 17:55 GMT+08:00