US STOCKS-Wall St drops on signs economy has stalled

* Intel to buy McAfee for $7.7 billion; McAfee shares soar

* Jobless claims rise to 9-month high

* Regional factory activity at lowest in a year

* Dow down 1.6 pct, S&P down 1.8 pct, Nasdaq down 1.6 pct

* For up-to-the-minute market news see
(Updates to late afternoon)

By Edward Krudy

NEW YORK, Aug 19 (BestGrowthStock) – U.S. stocks (Read more about the stock market today. ) tumbled on
Thursday as the latest dismal data added to speculation that
the economy may be heading for a more significant slowdown.

A report showing factory activity in the mid-Atlantic
states contracted in August for the first time since July 2009
blind-sided investors, who had been expecting activity to
increase, sending shares lower.

The news came shortly after a report showing first-time
claims for jobless benefits rose to a nine-month high at a
seasonally adjusted 500,000 last week, undermining hopes a
labor market recovery will support the economy.

“It’s more macro news that further adds credence to the
fact that we are in a slowdown,” said Kenneth Polcari, managing
director at Icap Corporates at the New York Stock Exchange.

“I’m bearish on the economy, I’m bearish on the market at
the moment,” he said. “The macro data for the last
month-and-a-half has been nothing but negative.”

The Dow Jones industrial average (.DJI: ) dropped 163.14
points, or 1.57 percent, to 10,252.40. The Standard & Poor’s
500 Index (.SPX: ) fell 19.27 points, or 1.76 percent, to
1,074.89. The Nasdaq Composite Index (.IXIC: ) lost 36.10 points,
or 1.63 percent, to 2,179.60.

The selloff in stocks was broad. Sectors most sensitive to
the economy’s performance were hit hardest, with stocks such as
manufacturer 3M, Bank of America, and Alcoa Inc taking the
brunt of the selling.

However, Polcari noted that volume was low and pointed to a
lack of participation by institutional fund managers, who he
said were on the sidelines due to uncertainty about the
economy.

The S&P 500 index fell back well below its 50-day moving
average, a worrying development for investors after the index
appeared to move up into a range between that level and its
200-day moving average over the last few days,

Even a bout of substantial M&A activity, which typically
boosts Wall Street’s mood, failed to stem the losses.

Intel Corp offered to buy security software maker McAfee
Inc for about $7.68 billion in cash. McAfee surged 57.2 percent
to $47.05, while Intel dipped 3.2 percent to $18.97.

Intel’s move followed BHP Billiton’s $39 billion hostile
bid for Potash Corp of Saskatchewan as well as plans by Dell
Inc to buy data storage company 3PAR Inc for $1.15 billion in
cash

Energy and materials shares also lost ground as the price
of oil fell while metal prices dipped as investors worried
about demand after the weak U.S. data.

Exxon Corp fell 1.7 percent to $59.10, while
Freeport-McMoRan Copper & Gold Inc fell 1.6 percent to $72.06.

Sears Holdings Corp tumbled 7.8 percent to $62 after the
department store chain reported a wider-than-expected quarterly
loss.. The index of consumer discretionary shares fell 1.8
percent.

Leading the Dow lower, 3M fell 2.5 percent to $81.50 and
Alcoa was off 3 percent to $10.60, while Bank of America
dropped 2 percent to $13.06.

TECHNICAL PICTURE

The S&P 500’s daily moving average convergence-divergence,
which sent a sell signal last week, strengthened the bearish
call as the MACD line fell below the zero line.

Even so, short term support held, with the S&P bouncing off
the 1,070 level, which represented last week’s low. If the
index falls through that, the next potential support level is
around 1,060.
(Reporting by Edward Krudy; Editing by Kenneth Barry)

US STOCKS-Wall St drops on signs economy has stalled