US STOCKS-Wall St falls on GM loss, unemployment rise

                                
 * GM losses, jobs data raise economy worries
                                
 * Biotech sector drives Nasdaq lower, Biogen shares plunge
                                
 * Oil price rises, further dampening investor sentiment
 (Updates to mid morning, adds byline)
                                
 By Walter Brandimarte
                                
 NEW YORK, Aug 1 (Reuters) - U.S. stocks fell on Friday as
hefty losses by General Motors and a report showing U.S.
employers cut jobs for the seventh straight month in July added
to concerns about the impact of the credit crisis on the
economy and the outlook for corporate profits.
                                
 The Nasdaq fell more than 1 percent as the biotechnology
sector sold off. Shares of Biogen Idec <BIIB.O> sank over 25
percent on complications related to a multiple sclerosis drug,
while Sun Microsystems <JAVA.O> lost nearly 14 percent after it
gave a profit warning and showed weakness in business computer
sales.
                                
 The U.S. unemployment rate hit 5.7 percent in July, its
highest in four years, as employers cut 51,000 non-farm jobs.
Analysts polled by Reuters had expected 75,000 job cuts but had
forecast the unemployment rate would rise less, to 5.6 percent.
For more see [IDnN01429062].
                                
 "We've never had that big an increase (in the unemployment
rate) where it wasn't called a recession," said David Wyss,
chief economist of Standard & Poor's in New York. "My opinion
remains the same. We're in a recession. It's going to be a mild
recession one but a long one."
                                
 The Dow Jones industrial average <.DJI> declined 50.40
points, or 0.44 percent, at 11,327.62, while the Standard &
Poor's 500 Index <.SPX> lost 5.82 points, or 0.46 percent, at
1,261.56. The Nasdaq Composite Index <.IXIC> fell 21.61 points,
or 0.93 percent, at 2,303.94.
                                
 A rise of more than $2 a barrel in U.S. crude oil prices
<CLC1> also weighed on investor sentiment.
                                
 GM <GM.N> shares were down 2 percent to $10.85, recovering
from earlier bigger losses, after the No. 1 U.S. automaker
posted a second-quarter loss of $15.5 billion, or $6.3 billion
excluding one-time items, much worse than forecast.
[ID:nN01288721].
                                
 But the biggest drag on the S&P 500 was Biogen, which lost
25.5 percent to $51.95 after two new brain disease cases were
detected in patients taking Tysabri, a multiple sclerosis drug
jointly manufactured with its Irish partner Elan
<ELN.I><ELN.N>. [ID:nL1273893]
                                
 Elan shares plunged 44.8 percent to $11.06 on the New York
Stock Exchange.
                                
 Biogen weighed on the entire biotechnology sector, which
had rallied on Thursday on news that Bristol-Myers Squibb Co
<BMY.N> was taking over ImClone Systems <IMCL.O>.
                                
 Shares of Schering-Plough Corp <SGP.N> also fell 5.3
percent to $19.97 after U.S. regulators rejected Bridion, its
drug to reverse the effects of anesthesia that had been
heralded as a breakthrough by analysts. [ID:nN01286748].
 (Additional reporting by Herbert Lash; Editing by James
Dalgleish)