RTRS: US STOCKS-Wall St falls on caution, weak company outlooks
* Corporate layoffs add to outlooks worry
* Declines in biotech shares weigh on Nasdaq
* Dow off 2.5 pct, S&P 500 off 2.2 pct; Nasdaq off 1.5 pct
* For up-to-the-minute market news, please click on [STXNEWS/US] (Updates to late afternoon)
By Leah Schnurr
NEW YORK, Dec 9 (Reuters) - U.S. stocks fell on Tuesday as investors mulled whether recent gains have staying power given rising corporate layoffs and disappointing profit outlooks.
Trading was choppy after shares jumped Monday to a month high, and analysts said profit-taking contributed to the negative tone.
Shares of FedEx Corp (FDX.N: Quote, Profile, Research, Stock Buzz) tumbled more than 16 percent to $62.50 the day after the company cut its fiscal 2009 outlook despite lower fuel prices, but said it expects to report a better-than-expected second-quarter profit.
"Over the past several days, the market has staged a fairly broad-based advance and this has occurred in the face of some really awful economic news and continuing corporate earnings warnings from a number of companies," said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.
"At this point, it's only normal to see a bit of pause or some hesitation and profit-taking in the markets."
The Dow Jones industrial average .DJI fell 229.07 points, or 2.56 percent, to 8,705.11. The Standard & Poor's 500 Index .SPX lost 20.20 points, or 2.22 percent, to 889.50. The Nasdaq Composite Index .IXIC was down 23.65 points, or 1.50 percent, at 1,548.09.
The declines snapped a two-day rally that had some market watchers speculating whether the worst of the stock rout could be past. The broad S&P 500 is up about 20 percent from the Nov. 21 lows, but remains down close to 40 percent year-to-date.
Earlier in the session, the Nasdaq gained on expectations the tech sector had seen the worst of the news stemming from the economic slump, fueling gains in big-cap tech shares, including semiconductors.
The drag in biotech stocks, however, pushed the Nasdaq into negative territory by early afternoon.
National Semiconductor Corp (NSM.N: Quote, Profile, Research, Stock Buzz) rose nearly 10 percent to $11.30 a day after the chip maker said it plans sharp cuts in manufacturing this quarter due to falling demand for personal mobile devices. For details see [ID:nN08525608].
Also on the upside, shares of Texas Instruments (TXN.N: Quote, Profile, Research, Stock Buzz) climbed 3.2 percent to $15.29 despite cutting its revenue forecast for the fourth quarter. [ID:nN08525027]. Continued...
