* Bank plan fallout, Bernanke uncertainty weigh
* Google revenues disappoint, sinking technology
* British terror alert adds to nervousness late
* Indexes drop more than 2 pct
* For up-to-the-minute market news, click []
(Adds volume, background on bank proposals)
By Ellis Mnyandu
NEW YORK, Jan 22 (Reuters) - U.S. stocks capped their worst
three-day slide in 10 months on Friday on fears the White
House's plan to curb bank risk-taking would cut profits, and
tech shares slumped after Google Inc's disappointing results.
Uncertainty about the Senate's confirmation of Ben Bernanke
for another term as the Federal Reserve's chairman also rattled
investors in a week when political squabbles helped erase
stocks' gains for 2010. For details, see []
"Between uncertainty over Bernanke, Obama's bank regulation
proposal and the election in Massachusetts, the market is like
a cork in the water and the Democrats just hit the flush," said
Jack Ablin, chief investment officer at Harris Private Bank in
Chicago. "It looks like we're headed really low."
Since the Democrats lost their 60-vote hold in the Senate
with the election of a Republican in Massachusetts on Tuesday,
there is a growing sense among investors that political
uncertainty has all but ended the rally that began in March.
Financials and technology shares endured the brunt of the
selling, with JPMorgan <JPM.N> off 3.4 percent at $39.16,
Goldman Sachs <GS.N> down 4.2 percent at $154.12 and Google
sliding 5.7 to $550.01, a day after the Web search company
posted quarterly revenue that missed some forecasts.
The Dow Jones industrial average <> dropped 216.90
points, or 2.09 percent, to 10,172.98. The Standard & Poor's
500 Index <.SPX> slid 24.72 points, or 2.21 percent, to
1,091.76. The Nasdaq Composite Index <> fell 60.41 points,
or 2.67 percent, to 2,205.29.
U.S. President Barack Obama unveiled his bank proposals on
Thursday, saying banks should no longer be allowed to own,
sponsor or invest in hedge funds for proprietary profit.
Proprietary trading -- when a firm uses its own money to make
bets on markets -- has been a profit engine for some major
banks.
The proposals must receive congressional approval.
For the week, the Dow dropped 4.1 percent, the S&P 500 lost
3.9 percent and the Nasdaq tumbled 3.6 percent. It was the
worst week for the S&P 500 and Nasdaq since October and the
worst week for the Dow since March.
Stocks hit session lows late in the day on news that
Britain had raised its international terrorism threat level.
[]
The S&P 500 registered its worst 3-day slide since March
2009, around the start of the recent rally that sent both the
S&P 500 and the Dow to 15-month highs as recently as Tuesday.
The Dow and the S&P 500 are now off more than 2 percent
year-to-date, while the Nasdaq has shed almost 3 percent.
The selling of the past three days left the market's
technical picture looking bleak after major indexes sunk below
key support levels and their 50-day moving averages, a move
considered a bearish signal.
In another sign of how rattled investors were, the CBOE
Volatility index <.VIX>, a measure of Wall Street's sentiment,
registered its biggest 3-day rise in nearly 3 years, increasing
55.4 percent.
Aside from worry about how the Obama proposals on banks,
investors also fretted about China's efforts to prevent the
world's third-largest economy from overheating.
Since China has led the nascent global economic recovery,
any curbs it puts on lending threatens to slow demand that
other economies rely on to spur their own growth.
Shares of multinationals and commodity-related companies
also took a tumble, with Alcoa Inc <AA.N> off 6 percent at
$13.40, Caterpillar Inc <CAT.N> down 4.6 percent at $54.25. The
S&P materials index <.GSPM> declined 2.3 percent on the New
York Stock Exchange.
On Nasdaq, Apple Inc <AAPL.O> was down 5.04 percent at
$197.59, making it the biggest drag, followed by Google.
Other disappointing news on the technology front came from
Advanced Micro Devices Inc <AMD.N>, which warned that sales in
the first quarter of 2010 will be down. Its shares tumbled 12.4
percent to $7.88.[].
The semiconductor index <.SOXX> lost 5.3 percent.
Credit card company Capital One Financial Corp <COF.N>
tumbled 12.1 percent to $37.53, a day after warning it faced
tightening profit margins on loans it makes. []
Capital One and American Express Co <AXP.N> reported
higher-than-forecast fourth-quarter earnings on Thursday but
expressed concern about the growth outlook for credit cards.
[]
AmEx shares were the Dow's top drag, falling 8.5 percent to
$38.59.
Volume on the New York Stock Exchange was 1.49 billion
shares, equal with last year's estimated daily average, while
on the Nasdaq, about 2.80 billion shares traded, above last
year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by
a ratio of 9 to 2, while declining stocks beat advancers on the
Nasdaq by about 8 to 3.
(Additional reporting by Ryan Vlastelica; Editing by Kenneth
Barry)
