US REPORT: Dow: 8,564.53 (-65.15) SP 500: 868.57 (-11.16) Nasdaq: 1,508.34 (-32.38):US STOCKS fell, wiping out last week's gains, after manufacturing showed a worsening economy that analysts said will hurt earnings at companies from JPMorgan to Apple.

JPMorgan tumbled 7.5 per cent on Merrill Lynch's prediction that the biggest US bank by assets may post a quarterly loss, while Apple slid 3.6 per cent after the maker of iPods was downgraded to neutral at Goldman Sachs.

Ingersoll-Rand and Textron lost more than 3.1 per cent as industrial production decreased for the third time in four months and the New York Federal Reserve's regional economic index contracted the most on record.

"There's a lot of uncertainty right now as we start the week," said John Wilson, co-director of equity strategy at Memphis, Tennessee-based Morgan Keegan. "Right now the concern is the depth and duration of the recession that we're in."

Apple slid $3.52 to $94.75 after being cut from "buy" at Goldman Sachs on concern that consumer spending will weaken further.

David Bailey reduced his 12-month share-price estimate to $115 from $125. JPMorgan fell $2.31 to $28.63. The stock was cut to "underperform" from "neutral" at Merrill Lynch, which said it is increasingly clear that credit costs in the US will get much worse. Merrill also slashed JPMorgan's share-price target by 39 per cent to $27.

Morgan Stanley and Goldman Sachs, which report earnings this week, both retreated.

The firms, which have each lost more than 69 per cent this year, probably will report fourth-quarter losses on shrinking asset values and a decline in fees for businesses such as merger advice and money management, according to analysts surveyed by Bloomberg.

Morgan Stanley declined 1.5 per cent to $13.64 after Deutsche Bank analyst Michael Mayo said earnings per share will drop 59 per cent in 2009 as revenue declines to the same level as 2005. Goldman Sachs fell 1.9 per cent to $66.46. Bank of America slid 5.5 per cent to $14.11.

ATT, the biggest US phone company, was downgraded to "neutral" from "buy" at Goldman Sachs, which noted the economic slowdown led to a drop in its employee pension fund. ATT shares lost 3.7 per cent to $27.13. - (Bloomberg)