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Stocks drop on bad news

NEW YORK — Investors worried about the recession have turned to a strategy of cherry-picking stocks — sending tech shares higher and industrials lower.

The market’s concerns Monday were focused on two fronts: the economic stimulus proposal now before the Senate, and a possible plan to give further aid to the nation’s banks. Meanwhile, mostly negative economic data and news of more layoffs helped extend the gloomy mood that gave the market its worst January ever.

President Barack Obama made a fresh appeal to Congress, saying that “very modest differences” over the stimulus plan should not delay its passage.

The stimulus package that passed the House last week without a single Republican vote now goes to the Senate. GOP lawmakers argue that the plan is too expensive and doesn’t include adequate tax cuts.

The market was also eyeing reports that Treasury Secretary Timothy Geithner is expected to outline a bank rescue plan next week, said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.

“The market is hoping for some resolution to the banking crisis,” he said. Investors have been concerned that unrelenting loan losses could lead to a major bank failure.

Meanwhile, the Commerce Department said personal spending fell for the sixth straight month in December by 1 percent.

Analysts had predicted a decline of 0.9 percent.

Incomes also dipped, and the personal savings rate shot higher, a sign that consumers remain extremely nervous.

The department also said construction spending fell 1.4 percent in December, slightly worse than the 1.2 percent economists expected.

News of more layoffs further discouraged investors.

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