* Malaysian Airliner downed in Ukraine war zone, 295 dead
* Morgan Stanley profit more than doubles, beats estimates
* Microsoft to cut up to 18,000 jobs, 14 percent of
* Dow off 0.5 pct; S&P 500 down 0.7 pct; Nasdaq off 0.9 pct
(Updates to afternoon)
By Angela Moon
NEW YORK, July 17 U.S. stocks fell on Thursday
in volatile trading on news that a Malaysian Airlines passenger
jet crashed near the Ukraine-Russia border, after the United
States and European Union imposed sanctions on Russia.
Investors sold equities in a move to avoid risk because of
conflicting reports about the reason why the plane went down. A
New York Stock Exchange floor trader, who spoke on condition of
anonymity, cited reports that the plane might been shot down.
"What's happening in the market is what you'd expect, a risk
reversal. Stocks fall a bit, gold rises a bit, energy prices are
still high, the volatility index spikes," said Art Hogan, chief
market strategist at Wunderlich Securities in New York.
The CBOE Volatility index surged 17.6 percent to
12.94 and was on track to post its biggest daily percentage gain
in at least three months. Spot gold rose 1.4 percent to
above $1,315 an ounce and U.S. crude shot up 1.8 percent
to $103.03 a barrel.
The Dow Jones industrial average fell 89.26 points or
0.52 percent, to 17,048.94. The S&P 500 lost 14.37 points
or 0.73 percent, to 1,967.20. The Nasdaq Composite
dropped 40.89 points or 0.92 percent, to 4,385.08.
The major U.S. stock indexes opened modestly lower following
news of fresh U.S. and European Union sanctions on Russia.
Stronger-than-expected earnings, however, helped curb the
By late morning, stocks slid to session lows after news that
a Malaysian airliner was brought down over eastern Ukraine on
Thursday. The crash killed all 295 people aboard and sharply
increased the stakes in a conflict between Kiev and pro-Moscow
rebels in which Russia and the West back opposing sides.
Ukraine accused "terrorists" - militants fighting to unite
eastern Ukraine with Russia - of shooting down the Malaysia
Airlines Boeing 777 with a heavy Soviet-era ground-to-air
missile as it flew from Amsterdam to Kuala Lumpur.
"If there's an escalation here and we go to Tier Three
sanctions, think about the economic effect it has on Russia and
its trading partners," Hogan said. "If sanctions become harsh
enough and have enough economic impact on Russia, it could drag
the core of Europe into a recession. That's the economic
The iShares China Large Cap ETF slipped 1.1 percent.
The NYSE Arca airline index was down 1.6 percent.
The U.S. sanctions, which were announced late on Wednesday,
hit some of Russia's biggest companies while the EU sanctions
were aimed at Russian companies that help destabilize Ukraine
and will block new loans to Russia through two multilateral
lenders. The Market Vectors Russia ETF lost 6.4 percent.
Equities had been holding near the unchanged mark earlier in
the session, largely on the back of solid earnings from
companies such as Morgan Stanley, down 0.2 percent at
$32.44, and UnitedHealth, up 2.4 percent at $85.77.
Microsoft shares rose 1.3 percent to $44.64 after
the company said it would cut up to 18,000 jobs, or about 14
percent of its workforce, resulting in pre-tax charges of $1.1
billion to $1.6 billion over the next four quarters.
Data on manufacturing and the labor market indicated that
the U.S. economy was improving, although the housing market
remains weak. The PHLX housing index fell 1.6 percent.
S&P 500 companies' profits are expected to grow 4.9 percent
in the second quarter, according to Thomson Reuters data, down
from the 8.4 percent growth forecast at the start of April.
Revenue is seen up 3 percent.
(Reporting by Angela Moon; Editing by Jan Paschal)