US STOCKS-Dow, S&P slip; Nasdaq climbs with Yahoo

* Recession fears pressure Dow, S&P 500

* Economic data points to worsening in economy

* Yahoo rallies on Microsoft comments

* Dow off 0.4 pct, S&P off 0.9 pct, Nasdaq up 0.5 pct (Updates to early afternoon, changes byline)

By Leah Schnurr

NEW YORK, Oct 16 (Reuters) - The Dow and the S&P 500 slipped in a choppy session on Thursday, pressured by nervousness that the economy might be sliding into a recession.

But the Nasdaq pushed higher after Microsoft Corp (MSFT.O: Quote, Profile, Research, Stock Buzz) Chief Executive Steve Ballmer said a Web search deal with Yahoo (YHOO.O: Quote, Profile, Research, Stock Buzz) makes economic sense, though the two sides are not in any discussions. For details, see [ID:nN16398342].

Shares of Yahoo shot up 10.3 percent to $12.96.

Worrying news on the economic front came from a report that showed an index of factory activity in the Mid-Atlantic region fell to an 18-year low this month, according to the Philadelphia Federal Reserve Bank.

The data fueled worries that even if recent moves to pump liquidity into financial markets begins to ease the credit crunch, recessionary fears remain.

"Even if the bailout works, I think the Street's figured out it's going to take time (and) it's going to get worse before it gets better," said Warren Simpson, managing director at Stephens Capital Management in Little Rock, Arkansas.

"I think everybody knows that we're going into a humdinger of a recession here," Simpson said.

The Dow Jones industrial average .DJI slipped 32.89 points, or 0.38 percent, to 8,545.02. The Standard & Poor's 500 Index .SPX was down 7.97 points, or 0.88 percent, at 899.87. The Nasdaq Composite Index .IXIC gained 8.26 points, or 0.51 percent, to 1,636.59.

Financial shares weighed, including Citigroup (C.N: Quote, Profile, Research, Stock Buzz), which fell 7.2 percent after it reported its fourth straight quarterly loss due to loan losses and write-downs for complex and risky debt. The bank was down at $15.07.

Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) , which is being bought by Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz), was down 3.1 percent at $17.67 after the securities firm posted a steeper-than-expected $7.5 billion third-quarter loss.

Oil companies were pulled down as U.S. crude futures fell below $70 a barrel for the first time since August 2007 after data showed larger-than-expected increases in inventories and weaker demand.

Chevron (CVX.N: Quote, Profile, Research, Stock Buzz) lost 4.7 percent to $57.16. (Reporting by Leah Schnurr; Editing by Jonathan Oatis)


Source: http://www.reuters.com/article/usMktRpt/idUSN1640581920081016?pageNumber=2&virtualBrandChannel=0