U.S. Stocks In Broad Slide As Economic Worries Mount

NEW YORK (MarketWatch) -- U.S. stocks on Wednesday thudded lower as signs of waning business spending re-ignited worries about the economy and news that a private-equity buyout of Clear Channel Communications Inc. is in jeopardy revived fears about tough credit-market conditions.

Orders for durable goods, an indicator of business spending, slid 1.7% in February, marking the second month of declines in a row.

"By signaling a decline in business spending, which has declined in each of the past eight recessions, today's report is consistent with economic recession," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co., of the durable-goods data.

After falling nearly 150 points, the Dow Jones Industrial Average was more recently down 123 points to 12,409, with 22 of its 30 components posting declines and financials leading the way lower. .

Early broker action had Oppenheimer & Co. cutting first-quarter profit forecasts for U.S. banks on average by 84%, sparking weakness in the sector. Shares of Citigroup Inc. , part of the Dow industrials, were recently off 5.7%.

J.P. Morgan Chase , another of the Dow's financial components, fell 3% and American Express lost 3.5%.

The S&P 500 fell 12.78 points to 1,340.20, while the Nasdaq Composite shed 27.60 points to 2,313.

Volume on the New York Stock Exchange neared 646 billion, with declining stocks outrunning those advancing by nearly 2 to 1. On the Nasdaq, 398 million shares traded, with decliners ahead of advancing issues more than 2 to 1.

The market opened under pressure after The Wall Street Journal reported Tuesday that a $19 billion deal to take Clear Channel private was poised to fall apart over credit terms. .

But investors seem less concerned about the credit crisis since last week, after the near collapse of investment firm Bear Stearns led to more extraordinary interventions by the Federal Reserve, including the backing of a deal for J.P. Morgan to buy Bear Stearns.

On Tuesday, U.S. stocks closed mostly higher after a two-session rally.

Economic woes as backdrop

"Credit market concerns appear to have been pushed somewhat to the background, and have been replaced by U.S. recession fears, which have weighed on the dollar most recently," said analysts at Action Economics.

The dollar extended its fall against the yen and remained weak against the euro, with the dollar index, which measures the U.S. currency against major counterparts, at 71.63, down from the 72.053 mark late Tuesday.

Ahead of the opening bell, the Commerce Department reported demand for durable goods fell 1.7% last month, surprising analysts who projected a slight rise after the prior month's 4.7% decline. .

"The data strongly suggest that the period of retrenchment in the manufacturing sector is likely to get far worse before things stabilize," wrote Joseph Brusuelas, U.S. chief economist, Ideaglobal Ltd., in a note.

In a later report, the Commerce Department estimated sales of new homes fell to a 13-year low in February, but with the projected slowdown less bleak than economists expected. .

"Combined existing and new home sales rose by 2.3% in February, the first substantial gain in a year. It's a start, but we will need to see more than one monthly blip to really gain any confidence," said Stephen Stanley, chief economist at RBS Greenwich Capital.

On the New York Mercantile Exchange, crude-oil futures gained $3.60 to $104.82 a barrel , while gold futures climbed $12.70 to $947.70 an ounce .

By sector, oil , utilities and metals miners led the gains, while airlines , banks and broker/dealers were posting the biggest losses.

In corporate developments, Ford Motor Co. shares fell 2% after the automaker said it is selling its Jaguar and Land Rover brands to India's Tata Motors Ltd. for $2.3 billion in cash. .

Motorola Inc. said its boad of directors approved a plan to break the company into two independent, publicly traded companies. Motorola's shares rose 2.5%.

Take-Two Interactive Software Inc. shed early gains, its shares recently off 0.2% after the company rejected as "inadequate" Electronics Arts Inc. and its $26-a-share cash bid. Electronic Arts' shares got hit harder, recently down 2%.

And shares of Oracle Corp. fell 1.6% ahead of the business software giant's third-quarter earnings results due out after the close. .

In overseas trading, stocks in Europe weakened as a one-day rally failed to spark momentum. .

Overnight, Asian markets were mixed, with shares in Japan ending lower while stocks gained in Hong Kong and Australia. .

By Kate Gibson