* Senate due to vote on revamped $700 billion bailout
* Manufacturing, jobs data heighten economic worry
* GE shares trim losses after Buffett makes investment
* Dow off 0.2 pct, S&P off 0.5 pct, Nasdaq off 1.1 pct
(Updates to close)
By Steven C. Johnson
NEW YORK, Oct 1 (Reuters) - U.S. stocks fell on Wednesday
as tight credit markets and bleak economic data kept investors
on edge before the Senate votes on a revamped financial sector
rescue plan that was initially rejected by lawmakers.
Trading was volatile a day after Wall Street gave its best
daily performance in six years, and investors worried about
how effective a $700 billion bank rescue in the United States
would be in averting recession.
Investors unloaded shares of technology, industrial and
energy shares, including economic bellwethers General Electric
<GE.N> , down nearly 4 percent, and heavy-equipment maker
Caterpillar <CAT.N> , off 4.5 percent.
Late in the day, GE shares moved off their lows after
investor Warren Buffett said he planned to pump $3 billion
into the diversified manufacturer, though the gains were
short-lived.
But investors' main focus was on the fate of the rescue
plan, which was expected to come to a vote on the Senate floor
after the market closed on Wednesday. The House of
Representatives shocked markets by voting down an earlier
version on Monday.
"Blind faith doesn't work this time after Monday's
disappointment," said Andre Bakhos, president of Princeton
Financial Group in Princeton, New Jersey. "People are cautious
and they lack confidence that a bailout plan will be a
one-stop solution. It won't be."
The Dow Jones industrial average <> ended down 19.59
points, or 0.18 percent, at 10,831.07. The Standard & Poor's
500 Index <.SPX> fell 5.30 points, or 0.45 percent, to
1,161.06. The Nasdaq Composite Index <> lost 22.48
points, or 1.07 percent, to 2,069.40.
Financial shares rose as investors hoped for a thumbs-up
vote from the Senate. The S&P financial index advanced 2.2
percent, while Citigroup <C.N> shares climbed 12 percent to
$23 and JPMorgan Chase <JPM.N> rose 6.3 percent to $49.63.
Reports showing weakness in manufacturing and the labor
market, however, added to market anxiety, leaving some
investors worried that more pain was inevitable even if the
government's rescue bill is eventually voted into law.
[]
"For the first time it's really starting to look like a
recession," said Marc Pado, U.S. market strategist at Cantor
Fitzgerald & Co, in San Francisco. "Maybe we don't get that
number in the fourth quarter necessarily, but it's going to be
tough at this point to avoid a recession."
Apple Inc <AAPL.O>, maker of the iPhone and iPod, were the
top drag on Nasdaq, falling 4 percent to $109.12.
Shares of IBM <IBM.N> fell 5.8 percent to $110.13 and were
the top drag on the Dow.
GE shares fell 3.9 percent to $24.50, while shares of
Caterpillar, also seen as an economic bellwether, shed 4.5
percent to $56.95.
GE had been down more than 8 percent earlier after
Deutsche Bank cut its price target and outlook, but moved
higher after it announced plans to sell $3 billion in
preferred shares to Buffett's Berkshire Hathaway <BRKa.N>,
with another $12 billion going to the public. []
"This news on Buffett's move is nice. It's one of the
things you want to see in a market bottom," said Joe Saluzzi,
co-manager of trading at Themis Trading in Chatham, New Jersey
"But we still need 20 more."
Energy shares also fell, with the S&P energy index <.GSPE>
down 1.7 percent, as U.S. crude oil futures for November
delivery <Clc1> dropped $2.11 to settle at $98.53 a barrel.
The U.S. rescue plan, which would let the Treasury
Department buy bad mortgage-related assets from banks, is the
centerpiece of a bid to unlock credit markets and head off a
deeper economic downturn in the United States and abroad.
Republican House members voted against the plan on Monday
by about 2-to-1. A majority of Democrats voted in favor.
The Senate's modified legislation, scheduled for a vote
late on Wednesday, will include a sharp increase in the amount
of bank deposits insured by the Federal Deposit Insurance Corp
and tax breaks that the House of Representatives rejected.
About 1.37 billion shares changed hands on the New York
Stock Exchange, well below last year's estimated daily average
of roughly 1.90 billion. On Nasdaq, about 1.93 billion shares
traded, a bit below last year's daily average of 2.17
billion.
Declining stocks edged out advancing ones on the NYSE by
about 1.1 to 1. On the Nasdaq, decliners beat advancers by a
ratio of nearly 2 to 1.
(Additional reporting by Ellis Mnyandu and Herbert Lash;
Editing by Jan Paschal)
