Wall St drops on jobs gloom, Intel warning

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks fell on Wednesday as signs of more labor market deterioration and a disappointing revenue outlook from technology bellwether Intel Corp heightened concerns about the severity of the recession.

Coming two days before the key U.S. nonfarm payrolls report for December, the ADP private sector jobs data underscored the challenge facing President-elect Barack Obama as he pushes ahead with plans to revive the world's largest economy.

Even before Intel's gloomy outlook the corporate news flow had turned bearish as Alcoa said late on Tuesday it would cut more than 15,000 jobs, halve capital spending and sell businesses as it reduces aluminum production in the face of the global economic downturn.

Shares of chip-maker Intel tumbled 6.3 percent to $14.41 on Nasdaq, putting the stock among the top drags on the Dow, along with Alcoa, down 8.4 percent at $11.10.

"I can't imagine this (ADP data) is going to bode very well for any kind of forecasting going into the nonfarm payroll and unemployment rate numbers that we're going to see on Friday," said Dave Lutz, managing director at Stifel Nicolaus in Baltimore. "It is absolutely terrible."

The Dow Jones industrial average fell 188.77 points, or 2.09 percent, to 8,826.33. The Standard & Poor's 500 Index slid 19.64 points, or 2.10 percent, to 915.06. The Nasdaq Composite Index tumbled 43.06 points, or 2.61 percent, to 1,609.32.

Other tech bellwethers heading lower included Apple, down 2.3 percent at $90.89, and Microsoft Corp, off more than 3 percent at $20.10.

The semiconductor index was down nearly 5 percent after Intel said preliminary fourth-quarter revenue was worse than expected, indicating the heavy toll from the economic slump on both business and consumer spending.