RTRS: US STOCKS-Wall St falls as bleak economic outlook nags
* Economic outlook in focus after Fed rate cut
* Morgan Stanley falls after wider-than-expected loss
* Apple's Jobs won't deliver address at Macworld
* Dow off 1.4 pct, S&P off 1.6 pct, Nasdaq off 1.5 pct
* For up-to-the-minute market news, please click on [STXNEWS/US] (Updates to midmorning)
By Leah Schnurr
NEW YORK, Dec 17 (Reuters) - U.S. stocks fell on Wednesday as enthusiasm over the Federal Reserve's surprisingly aggressive interest rate cut gave way to weak financial results and the dismal economic outlook.
Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) shares slid more than 6 percent after reporting a worse-than-expected quarterly loss as the credit crisis inflicted more writedowns. For details, see [ID:nN17282690].
Apple Inc (AAPL.O: Quote, Profile, Research, Stock Buzz) was a major weight on the Nasdaq after the iPod maker said Chief Executive Steve Jobs will not deliver the keynote address at the Macworld trade show next month, reviving concern about his health. Apple's shares tumbled about 7 percent to $88.77. [ID:nN16287306]
The market also continued to absorb Tuesday's bold move by the Federal's Reserve to slash borrowing costs to a record low, even zero, while it pledged more unconventional steps to alleviate the year-long recession.
"Everyone originally was very enthused yesterday because the Fed made it known they were going to stand and do anything that is necessary, no matter what, to get this economy back on track," said Sal Arnuk, co-manager of trading at Themis Trading in Chatham, New Jersey.
"This morning we awaken with a hangover and the realization of how many bullets do they have left."
The Dow Jones industrial average .DJI fell 126.24 points, or 1.41 percent, to 8,797.90. The Standard & Poor's 500 Index .SPX lost 14.42 points, or 1.58 percent, to 898.76. The Nasdaq Composite Index .IXIC gave up 23.20 points, or 1.46 percent, at 1,566.69.
Tuesday's decision from the U.S. central bank sent stocks sharply up, helping the markets further recover from 11-year lows hit in late November. Analysts noted that Wednesday's decline was also due to profit-taking following the significant rally.
The broad S&P 500 is up about 20 percent from the November intraday low, but is down nearly 39 percent on the year so far.
The Fed's move was felt around the world, with Norway cutting its interest rates by 175 basis points, while eyes were on Japan for a possible rate cut from an already low 0.3 percent later in the week.
