* Recovery worries rein in risk appetite
* BofA-Merrill cuts semis' growth outlook
* Dow off 0.9 pct; S&P off 1.3 pct; Nasdaq off 1.7 pct
* For up-to-the-minute market news, click []
(Updates to close)
By Ellis Mnyandu
NEW YORK, Nov 19 (Reuters) - Technology stocks drove a
broad-based U.S. sell-off on Thursday as a brokerage took a
dim view of demand prospects for the semiconductor sector,
while economic data underscored the fragility of the
recovery.
Bank of America-Merrill Lynch cut its 2010 growth outlook
for the semiconductor industry on concerns about a rising
inventory glut. It downgraded 10 stocks, including Intel Corp
<INTC.O>, Texas Instruments Inc <TXN.N> and Marvell Technology
Corp. <MRVL.O>. For details, see []
The downgrades were a setback for those betting that the
technology sector would fare better than others as the
recovery takes hold. Chips are essential to a broad range of
products, including computers and mobile devices.
Investors have ridden the tech wave since the S&P 500 hit
a 12-year closing low on March 9. Shares of Dow component
Intel fell 4.1 percent to $19.30 on Nasdaq. The PHLX
Semiconductor Index <.SOXX> dropped 3.4 percent.
On the economic front, the Conference Board's index of
U.S. leading economic indicators <USLEAD=ECI>, a gauge of the
U.S. economy's prospects, rose 0.3 percent to 103.8, the
highest since September 2007. But the increase fell short of
Wall Street's expectation for a rise of 0.5 percent.
"There's this feeling that the economy has lost momentum
from the third quarter," said Bruce Zaro, chief technical
strategist at Delta Global Advisors in Boston. "The market
gained traction to the downside when the disappointing
economic indicators came out."
There was also more disconcerting news in housing. A
record one in seven U.S. mortgages were in foreclosure or at
least one payment was past due in the third quarter, according
to fresh data signaling that the housing market's recovery
will be tepid at best. []
The U.S. dollar's gain was another headwind for stocks as
it pressured prices of natural resources like crude oil and
gold, pushing down shares of companies such as Alcoa <AA.N>
and U.S. Steel Corp <X.N>. The S&P materials index <.GSPM>
shed 1.5 percent as the U.S. dollar index <.DXY> rose 0.2
percent.
The Dow Jones industrial average <> shed 93.87 points,
or 0.90 percent, to end at 10,332.44. The Standard & Poor's
500 Index <.SPX> slid 14.90 points, or 1.34 percent, to
1,094.90. The Nasdaq Composite Index <> dropped 36.32
points, or 1.66 percent, to 2,156.82.
Bank of America-Merrill Lynch said notions of a strong
rebound for the semiconductor industry next year may not be
realistic.
Texas Instruments shares fell 3.4 percent to $24.88 on the
New York Stock Exchange, while Marvell Technology Corp
<MRVL.O> shares declined 5.1 percent to $15.27 on Nasdaq.
Shares of iPod and iPhone maker Apple Inc <AAPL.O> slid
2.7 percent to $200.51 and ranked as a top drag on Nasdaq.
The sell-off was broad-based, with all but four of the
Dow's 30 stocks ending lower. Among other hard-hit sectors
were financials, industrials and consumer discretionaries.
An S&P index of energy shares <.GSPE> slid 2.1 percent
after U.S. front-month crude futures <CLZ9>, which expire on
Friday, fell $2.12 lower, or 2.7 percent, to settle at $77.46
a barrel on the New York Mercantile Exchange.
The rising greenback hurt other the prices of other
commodities. Shares of Alcoa, an aluminum producer, lost 3.9
percent to $13.22 on the NYSE.
Financials also took a hard knock, with the KBW bank index
<.BKX> down 2 percent, while the Dow Jones home construction
index <.DJUSHB> declined 1.7 percent.
Health insurance stocks fell a day after U.S. Senate
Majority Leader Harry Reid released an $849 billion healthcare
reform bill that analysts said would extend coverage to tens
of millions of the uninsured. []
Goldman Sachs said in a note the bill may cause problems
for managed-care companies regarding profit margin
regulation.
The Morgan Stanley Healthcare Payor index <.HMO> fell 1.2
percent. Even so, the benchmark S&P 500 is up 61.8 percent
from its 12-year closing low of March 9.
(Reporting by Ellis Mnyandu; Editing by Jan Paschal)
