* China manufacturing contracts for 11th month
* Euro service sector posts downturn
* U.S. crude drops below $92
* Norfolk Southern sees weak shipments, shares fall
* Indexes down: S&P 0.5 pct, Dow 0.4 pct, Nasdaq 0.5 pct
By Edward Krudy
NEW YORK, Sept 20 U.S. stocks fell on Thursday
as data showing slowing growth in China and Europe, and weak U.S
employment figures, underscored the headwinds faced by the
global economy even as central banks aggressively step up
The data pressured stocks at the forefront of economic
activity, such as miners and energy companies. U.S. crude eased
on Thursday to trade under $92 a barrel, dropping for a fourth
day, while copper slipped from 4-1/2 month highs. Shares of
aluminum producer Alcoa fell 1.3 percent.
"Sell on the central bank news, I continue to say for now,
as the reality of slowing economic and earnings growth, that was
swept under the rug for a few months, pops back out again over
the next month," Peter Boockvar, equity strategist and portfolio
manager at Miller Tabak in New York said in a note.
Manufacturing in China contracted for an 11th straight month
in September, according to a private sector survey of factory
managers; in the euro zone, a downturn in activity in the
service sector steepened this month at the fastest pace since
The number of Americans filing new claims for jobless
benefits fell last week, but from an upwardly revised number the
prior weak, with the underlying tone of the report pointing to
some weakening in the labor market.
Shares of railroad company Norfolk Southern Corp
dropped 6.8 percent to $67.74 after it said weaker shipments of
coal and merchandise as well as lower fuel-surcharge revenue
would reduce its third-quarter earnings compared with a year
The Dow Jones industrial average dropped 50.18
points, or 0.37 percent, to 13,527.78. The Standard & Poor's 500
Index fell 6.74 points, or 0.46 percent, to 1,454.31. The
Nasdaq Composite Index lost 16.77 points, or 0.53
percent, to 3,165.85.
Market losses were relatively light, with the S&P 500 having
rallied 7 percent since early August, reflecting a belief that
monetary easing in the form of bond buying by the Federal
Reserve and the European Central Bank will support the market.
"The weaker than expected PMI data across much of the globe
is setting the tone right now," said Ryan Larson, head of equity
trading at RBC Global Asset Management in Chicago.
"But keep in mind that as we have seen over the last several
weeks and several months now ... any meaningful losses have been
somewhat back-stopped by the fact that the Fed and the ECB are
going to be there with additional policy measures."
UBS raised its target level for the S&P 500 by the
end of 2012 to 1,525 from 1,375 Thursday, saying equity markets
will climb after aggressive monetary easing by central banks.
"Over the short run, we believe that the 'risk on' trade will
continue, with a rotation into the most volatile and
economically sensitive stocks," said UBS's chief U.S. equity
strategist Jonathan Golub in a research note.
Bank of America Corp is planning to cut 16,000 jobs
by year-end as it speeds up a company-wide cost-cutting
initiative amid declining revenues, the Wall Street Journal
reported on Wednesday. The bank's shares fell 1.6percent to
Initial claims for state unemployment benefits slipped 3,000
to a seasonally adjusted 382,000. The prior week's figure was
revised up to show 3,000 more applications than previously