US stocks fall as deficit and jobs worries rise

THE Dow hit a seven-month low last night as increases in jobless claims and the trade deficit and a slowdown in China’s export growth spurred concern the economy may falter.

Caterpillar and United Technologies slumped at least 2.4%, pacing declines among industrial companies. Exxon Mobil and Chevron dropped at least 3% as crude oil declined a third day amid investor concern that fuel-demand will slow.

General Motors decreased 2.6% after the largest US automaker said chief financial officer Chris Liddell will leave the company next month.

The Standard & Poor’s 500 Index fell 1.9% to 1,295.11. The Dow slid 228.41 points, 1.9%, to 11,984.68, its biggest drop since August 11.

European shares tumbled as Spain’s credit rating was cut by Moody’s. Oil pared an earlier drop, falling 1.6% to $102.76 a barrel, as Associated Press reported that Saudi Arabian police opened fire at a rally.

“There are so many uncertainties that it’s hard to want to bid up this market,” said James Paulsen, chief investment strategist at Wells Capital Management. “On top of claims popping back up, there’s worsening in the trade deficit at a time when the emerging world is slowing down and the Middle East crisis creates an unpredictable environment for oil. To make matters worse, Spain gets downgraded, which is an indication that the European crisis may be far from being put to bed.”

The S&P 500 has fallen 3.6% from this year’s highest level on February 18 as oil surged amid unrest in Libya and the Middle East.

The benchmark for US equities has rallied 91% from its bear-market low on March 9, 2009, amid government stimulus measures and as corporate earnings beat analysts’ estimates for eight straight quarters.

It has traded near its average price from the past 50 days, according to data compiled by Bloomberg. The S&P 500 hasn’t closed below that threshold since September 1.

“Since the 50-day moving average is used by certain momentum based traders, it would imply lower prices” if the index falls below, said Arthur Huprich, an analyst with Raymond James and Associates.

Losses may accelerate should the S&P 500 fall below the February 24 intraday low of 1,294.26, he said.