* Bank sources in China say govt acts to curb lending
* Manufacturers, commodity stocks drop on China concerns
* IBM sparks tech rout as 2010 forecast disappoints
* Dow and S&P 500 off 1.5 pct; Nasdaq off 1.7 pct
* For up-to-the-minute market news, click []
(Updates to late afternoon, changes byline)
By Ellis Mnyandu
NEW YORK, Jan 20 (Reuters) - U.S. stocks suffered their
worst slide of 2010 on Wednesday on fears that China's bank
lending curbs might jeopardize the global recovery and IBM's
outlook, which dented optimism about technology shares.
Official media and banking sources said Chinese authorities
instructed some major banks to curb their lending over the rest
of this month after an early burst of credit. For details, see
[].
Signals that China, the world's third-largest economy, may
restrain its economic expansion hurt shares of natural resource
companies, including Alcoa Inc <AA.N>, off 2.6 percent at
$15.20, and big manufacturers, with Caterpillar Inc <CAT.N>,
down 2.2 percent at $59.60.
The S&P materials sector index <.GSPM> fell 2 percent.
"This is really a direct result of concerns around the
tightening of credit in China," said Peter Kenny, managing
director at Knight Equity Markets in Jersey City, New Jersey.
"To the extent that China is really driving global growth,
here you have a reaction to the prospect of a slackening of
that growth."
Investors have counted on emerging economies like China to
underpin a nascent global recovery, so any restrictive policy
there could be a setback for investors whose bets on a
sustainable rebound recently propelled the S&P 500 to 15-month
highs.
The Dow Jones industrial average <> slid 159.38 points,
or 1.49 percent, at 10,566.05. The Standard & Poor's 500 Index
<.SPX> dropped 16.79 points, or 1.46 percent, at 1,133.44. The
Nasdaq Composite Index <> lost 39.34 points, or 1.70
percent, at 2,281.06.
The Dow and the Nasdaq had their largest daily percentage
losses since late October and the S&P 500 its biggest drop
since late November, one day after reaching fresh 15-month
highs on bets the Democrats would lose a Senate seat.
Shares of International Business Machines Corp <IBM.N>, a
major technology services company, fell 3.8 percent to $129.07
as investors viewed its 2010 outlook, released late on Tuesday,
as pointing to a potential slowdown in profit growth.
[].
IBM was the Dow's biggest drag, followed by energy company
Chevron Corp <CVX.N>, down 2.1 percent at $78.05. Diversified
manufacturer United Technologies Corp <UTX.N>, another Dow
component, was down 1.8 percent at $70.92.
The S&P energy index <.GSPE> dropped 2.1 percent. A run-up
in the U.S. dollar weighed on dollar-denominated commodity
prices. U.S. front-month crude <CLc1> shed 2 percent to $77.34
a barrel.
The U.S. dollar index <.DXY> was up 1.1 percent against
major currencies, helped by worries about Greece's ability to
refinance its deficit.
On Nasdaq, Apple Inc <AAPL.O> was the top drag, down almost
2 percent at $210.05. Other tech bellwethers off 1 percent or
more were Google <GOOG.O>, Microsoft <MSFT.O> and Cisco
<CSCO.O>.
Healthcare stocks, which led an advance on Tuesday on signs
healthcare overhaul could face new hurdles in Congress,
declined on Wednesday as some investors booked profits.
The Morgan Stanley healthcare payor index <.HMO> dropped
2.5 percent and an index of pharmaceutical companies <.DRG>
fell 0.6 percent.
On a busy earnings day for U.S. banks, Wells Fargo & Co
<WFC.N> and U.S. Bancorp <USB.N> reported better-than-forecast
quarterly earnings, helped by recent acquisitions, while larger
rival, Bank of America Corp, got a boost from Merrill Lynch.
Bank of America <BAC.N>, the top U.S. bank by assets,
reported a wider-than-expected loss but said its credit
problems were beginning to stabilize. [].
U.S. Bancorp shares rose 2.3 percent to $25.05 and Bank of
America gained 0.2 percent to $16.35. The KBW bank index <.BKX>
rose 1.3 percent.
(Additional reporting by Rodrigo Campos; Editing by Kenneth
Barry)
