May 6, 2014 / 6:30 PM / 4 years ago

US STOCKS-Wall St falls as financials weigh; Twitter tumbles

* AIG shares slip after posting decline in earnings

* Office Depot to close 400 U.S. stores; shares up 17 pct

* Einhorn bets Athenahealth will fall, traders sell

* Indexes down: Dow 0.7 pct; S&P 0.8 pct; Nasdaq 1.1 pct (Updates prices, changes comment, byline)

By Rodrigo Campos

NEW YORK, May 6 (Reuters) - U.S. stocks fell on Tuesday as AIG weighed on financial shares after disappointing earnings and a slide in Twitter took down other names in the technology and internet spaces.

AIG shares fell 4.3 percent to $50.43 a day after posting a 27 percent drop in quarterly income. Financials, down more than 1 percent, were the largest decliners among the S&P 500’s top ten industry sectors.

Twitter shares tumbled 15 percent to $32.90 after the expiration of a six-month “lock-up” period that had restricted the sale of about 82 percent of its outstanding stock.

Traders also kept an eye on developments in Ukraine, where supporters of Russia and of a united Ukraine are accusing each other of tearing the country apart. The former Soviet republic is sliding toward war.

“The short term issue is Ukraine. We don’t know when we’ll wake up one morning and (Russian President Vladimir) Putin is going to be in eastern Ukraine,” said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

De Gan also said, despite improving economic data, the S&P 500 is facing a hurdle as it nears its all-time high.

“We’re at resistance and we need something credible to push us through it. The economy has to undergo a transition from a very weak first quarter and we’re waiting for more proof on that.”

The Dow Jones industrial average fell 117.11 points or 0.71 percent, to 16,413.44, the S&P 500 lost 14.53 points or 0.77 percent, to 1,870.13 and the Nasdaq Composite dropped 47.18 points or 1.14 percent, to 4,090.875.

Athenahealth shares slumped 13.9 percent to $109.21, a day after hedge fund manager David Einhorn said the company is part of a portfolio of overvalued stocks his Greenlight Capital was betting against.

Office Depot Inc raised its forecast for full-year adjusted operating income and said it would close at least 400 stores in the United States over two years, sending shares up 17.3 percent to $4.89.

Twitter’s share price rout came in heavy trading, with more than 92 million shares changing hands so far, second only to the near 118 million shares traded on its debut. The 10-day volume average was just under 16 million.

Adding to a string of major cross-border deals in the healthcare industry, Germany’s Bayer acquired Merck & Co’s consumer care business for $14.2 billion. Merck shares fell 2.6 percent to $57.11.

On the data front, the U.S. trade deficit narrowed in March as exports rebounded, but the improvement was probably not enough to help improve a weak print in first-quarter growth. (Reporting by Rodrigo Campos; Editing by Nick Zieminski)

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