US STOCKS-Wall Street falls after surprise rise in jobless claims, stimulus impasse

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* Walgreens rises on 2021 profit growth forecast
* Weekly jobless claims unexpectedly rise in latest week
* Energy stocks slide as oil prices take a hit
* Indexes down: Dow 0.85%, S&P 0.99%, Nasdaq 1.42%

(Adds comment, details; Updates prices)
By Medha Singh and Shivani Kumaresan
Oct 15 (Reuters) - U.S. stocks dropped on Thursday as an
unexpected rise in weekly jobless claims compounded fears of a
stalling economic recovery, against the backdrop of dimming
hopes for more fiscal aid before the election.
Initial claims for state unemployment benefits totaled a
seasonally adjusted 898,000 for the week ended Oct. 10, compared
to 845,000 in the prior week, the Labor Department said on
Thursday. Economists polled by Reuters had forecast 825,000
applications in the latest week. A separate report showed manufacturing activity in New York
State fell more than expected in October. "The initial round of stimulus is running low and we are
seeing the effects of that right now. You are seeing furloughs
turn into full unemployment numbers," said Brian Walsh Jr.,
senior financial adviser at Walsh & Nicholson Financial Group.
A day after Treasury Secretary Steven Mnuchin said a deal on
more federal aid was unlikely before the Nov. 3 presidential
election, President Donald Trump said there was still a chance.
Wall Street's indexes fell for the third straight day, with
the S&P 500 now nearly 4% below its intraday record high hit on
Sept. 2, after rising to within 1% of that level earlier this
week.
With less than 20 days to Election Day, Trump and Democratic
challenger Joe Biden will hold dueling prime-time town halls on
Thursday instead of their second presidential debate, which was
canceled after Trump declined to take part in a virtual matchup.
Focus is also on the quarterly earnings scorecard for
corporate America, with expectations for third-quarter earnings
improving to an 18.8% drop from a 25.0% tumble forecast on July
1, according to Refinitiv IBES data.
Morgan Stanley MS.N edged 0.6% higher after it beat
third-quarter profit estimates, winding up mixed results from
major U.S. lenders. The earnings reports saw those focused on
trading clocking big gains while retail banks took a hit from
the COVID-19 pandemic. All major S&P sectors were lower, with energy stocks .SPNY
sliding 1.1% as oil prices tumbled more than 2% on worries about
demand recovery. O/R
At 10:51 a.m. ET, the Dow Jones Industrial Average .DJI
was down 243.51 points, or 0.85%, at 28,270.49, the S&P 500
.SPX was down 34.60 points, or 0.99%, at 3,454.07. The Nasdaq
Composite .IXIC was down 166.55 points, or 1.42%, at
11,602.18.
Walgreens Boots Alliance Inc WBA.O gained 3% as the
drugstore chain forecast profit to grow in single digits in 2021
after posting a better-than-expected fourth-quarter profit.
The S&P 1500 airlines index .SPCOMAIR shed 2.3% as United
Airlines UAL.O reported a 78% drop in quarterly revenue.
Shares of drug developer Vertex Pharmaceuticals Inc VRTX.O
sank 19.2% after it discontinued its trial of a protein
deficiency disorder treatment.
Declining issues outnumbered advancers for a 3.00-to-1 ratio
on the NYSE and a 2.82-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and no new low,
while the Nasdaq recorded 22 new highs and 23 new lows.