U.S. STOCKS - Markets sink on bearish semi note, health insurers

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks fell on Thursday, with all major indexes down more than 1 percent on weakness in the technology and health insurance sectors.

Semiconductor stocks sank after Bank of America-Merrill Lynch cut its 2010 growth outlook for the industry, citing the potential for a correction in inventory levels.

BofA downgraded 10 stocks in the group, including Intel Corp, Texas Instruments Inc and Marvell Technology Corp.

"Tech and semis are one of the areas that have led the market, and now they're very over extended," said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio. "Investors are asking if they believe the rally and whether we've moved up too fast."

Dow component Intel fell 5.3 percent to $19.05, while Marvell sank 6.2 percent to $15.08, and Texas Instruments lost 4 percent to $24.75. The Philadelphia Semiconductor index dropped 4.1 percent.

The Dow Jones industrial average slid 132.64 points, or 1.27 percent, to 10,293.67. The Standard & Poor's 500 Index fell 17.24 points, or 1.55 percent, to 1,092.56. The Nasdaq Composite Index tumbled 40.83 points, or 1.86 percent, to 2,152.31.

Health insurance stocks fell after U.S. Senate Majority Leader Harry Reid released a long-awaited healthcare reform plan on Wednesday that budget analysts said would extend coverage to tens of millions of the uninsured.

The Morgan Stanley Healthcare Payor index fell 1.5 percent, while Cigna Corp lost 3 percent to $29.89, and WellPoint Inc shed 1 percent to $51.88.