November 6, 2008 / 7:34 PM / 9 years ago

US STOCKS-Wall St yanked lower by economic fears

* Cisco outlook, retail sales heighten recession fears

* AnnTaylor drops on bleak sales

* Jobless claims dip but labor market stress persists

* Dow off 4.2 pct, S&P off 4.3 pct, Nasdaq off 3.5 pct (Updates to midafternoon)

By Leah Schnurr

NEW YORK, Nov 6 (Reuters) - U.S. stocks tumbled on Thursday with the Dow and S&P 500 down about 4 percent as a disappointing outlook from Cisco Systems (CSCO.O) and bleak sales from some major retailers fueled worries of a deepening economic turndown.

Among retailers adding to worries about the consumer’s ability to keep spending, AnnTaylor ANN.N and Talbots TLB.N fell more than 20 and 10 percent respectively as the women’s chains logged sharp declines in quarterly sales.

Retail chains posted the worst monthly sales data in more than three decades as consumers, beleaguered by the financial crisis, chopped spending in October.

Spurring economic concerns, the government said weekly jobless claims fell but were still at a level showing labor market strains a day before the October jobs payroll report on Friday, which is likely to underscore the economic challenges before President-elect Barack Obama.

“This downward spiral of negative feedback is spreading to the economy as a whole and to the consumer and that’s not a positive sign for stocks,” said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama.

“Those are things that there’s really no quick fix for and we’re seeing that discounted in the market.”

The Dow Jones industrial average .DJI slid 381.75 points, or 4.18 percent, to 8,757.52. The Standard & Poor's 500 Index .SPX lost 40.67 points, or 4.27 percent, to 912.10. The Nasdaq Composite Index .IXIC fell 59.10 points, or 3.51 percent, to 1,622.54.

Despite the stock market’s rally on Election Day on Tuesday, it had hardly made much headway following a disastrous October. The S&P 500 index is about 1.5 percent up from its Oct. 10 low, which marked the lowest level for stocks in more than 5 years.

Wall Street economists are forecasting that Friday’s data will show 200,000 more jobs were eliminated in October, marking a 10th straight month of declining payrolls.

Cisco, the largest maker of networking gear, gave up 2.2 percent at $17.01, dragging along other technology bellwethers, including Apple (AAPL.O), which was off 3.3 percent to $99.89.

Cisco said after the closing bell on Wednesday that revenue could fall as much as 10 percent in the current quarter.

News Corp NWSa.N dove 16.5 percent to $8.18 after the media conglomerate cut its full-year forecast.

AnnTaylor sank 25.8 percent to $8.92, while Talbots lost 10.9 percent to $6.72.

Recession concerns also hit the price of oil which was down $4.15 at $61.15 a barrel after earlier touching a 19-month low of $60.16. Energy companies fell along with crude. Exxon Mobil (XOM.N) was down 3.7 percent at $70.98 and Chevron (CVX.N) fell 4.7 percent to $71.40.

General Motors (GM.N) slid 10.6 percent to $4.97, as Ford (F.N) fell 4.8 percent to $1.99. The drop in auto stocks followed a profit warning from Japanese rival Toyota (TM.N)(7203.T) For details, see [ID:nSP306564]

Shares of Walt Disney Co (DIS.N) fell 4.5 percent to $23.15 ahead of quarterly results expected after the closing bell. (Additional reporting by Ellis Mnyandu; Editing by Kenneth Barry)

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