US STOCKS-Wall St drops as recovery fears curb risk appetite

* Recovery worries rein in risk appetite

* BofA-Merrill cuts semis' growth outlook

* Dow off 1.3 pct; S&P 500 off 1.7 pct; Nasdaq off 2 pct

* For up-to-the-minute market news, click [STXNEWS/US] (Updates to early afternoon, changes byline)

By Ellis Mnyandu

NEW YORK, Nov 19 (Reuters) - U.S. stocks slid on Thursday as a brokerage's bearish view of the semiconductor industry hit technology shares and a key economic report raised concerns about the recovery, curbing the appetite for riskier assets.

The U.S. dollar's gain was another headwind for stocks as it pressured prices of natural resources like crude oil and gold, pushing down shares of companies such as Alcoa (AA.N: 行情) and U.S. Steel Corp (X.N: 行情).

The S&P materials index shed 2.1 percent.

Bank of America-Merrill Lynch cut its 2010 growth outlook for the semiconductor industry, and downgraded 10 stocks, including Intel Corp (INTC.O: 行情), Texas Instruments Inc (TXN.N: 行情) and Marvell Technology Corp (MRVL.O: 行情). For details, see [ID:nBNG431820]

Dow component Intel fell 4.7 percent to $19.18, and the Philadelphia Semiconductor index dropped 3.6 percent.

The Conference Board's index of U.S. leading economic indicators USLEAD=ECI, a gauge of the U.S. economy's prospects, rose 0.3 percent to 103.8, the highest since September 2007. But the increase fell short of Wall Street's expectation for a 0.5 percent rise.

"There's this feeling that the economy has lost momentum from the third quarter," said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston. "The market gained traction to the downside when the disappointing economic indicators came out."

The Dow Jones industrial average .DJI fell 136.72 points, or 1.31 percent, to 10,289.59. The Standard & Poor's 500 Index .SPX dropped 19.27 points, or 1.74 percent, to 1,090.53. The Nasdaq Composite Index .IXIC tumbled 43.85 points, or 2.00 percent, to 2,149.29.

The sell-off was broad-based, with all but three of the Dow's 30 stocks lower. Among other hard-hit sectors were financials, industrials and consumer discretionaries.

An S&P index of energy shares slid 2.5 percent as U.S. crude futures fell $2.18, or 2.7 percent, to $77.40 a barrel. The rising greenback hurt other commodities, and Alcoa's stock (AA.N: 行情) lost 4.3 percent to $13.17.

Health insurance stocks fell a day after U.S. Senate Majority Leader Harry Reid released an $849 billion healthcare reform bill that analysts said would extend coverage to tens of millions of the uninsured. [ID:nN18125877]

Goldman Sachs said in a note the bill may cause problems for managed-care companies regarding profit margin regulation.

The Morgan Stanley Healthcare Payor index fell 2.6 percent.

Even so, the benchmark S&P 500 is up 61.6 percent from its 12-year closing low of March 9. (Reporting by Ellis Mnyandu; Editing by Jan Paschal)