Stocks fell on Monday as concerns that a possible global flu outbreak could dampen optimism about the economy overshadowed a cost-cutting plan from General Motors Corp and gains in biotechnology stocks.
Wall Street slid in choppy trade as governments around the world moved to contain the spread of a possible swine flu outbreak, as a virus that is believed to have killed over 100 people in Mexico spread to the United States and Canada and may have reached as far as New Zealand.
The Amex Airline Index shed 11.2 percent as investors worried that travel would be hit be the flu fears. Among the laggards, UAL Corp
However, the worries were tempered as GM
There's no question that (the flu outbreak) is affecting some stocks, such as airlines and restaurants but it's clearly not a big enough issue to effect the outlook for the global economy, said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.
The question of what will happen to GM is an ongoing and substantial story. The message of the market is they may have done just exactly what they need to to break even.
The Dow Jones industrial average dropped 71.05 points,or 0.88 percent, to 8,005.24. The Standard & Poor's 500 Index dropped 9.78 points, or 1.13 percent, to 856.45. The Nasdaq Composite Index <.IXIC> dropped 16.93 points, or 1.00 percent, to 1,677.36.
On Nasdaq, cell-phone chip supplier Qualcomm Inc
Recent data has suggested the recession could be abating, and quarterly earnings have been less disappointing than Wall Street expected.
In contrast, the threat of a flu pandemic triggered by the new swine flu strain sent shares of drugmakers higher, with Gilead Sciences
The CBOE Volatility Index, considered to be Wall Street's fear gauge, rose 6 percent to 39.05.
Jitters over what a government stress test of 19 major financial institutions might reveal pressured financial stocks, with the KBW Bank index off 3.5 percent. Wells Fargo & Co
Also on the earnings front, Dow component Verizon Communications Inc
(Additional reporting by Leah Schnurr)