* Selloff the worst since June 1
* Juniper networks tumbles after warning on results
* Emerson shares down, hits industrials on growth worry
* Indexes down: Dow 1.6 pct, S&P 2 pct, Nasdaq 2.7 pct
* For up-to-the-minute market news see [STXNEWS/US] (Updates close with new volume levels, latest VIX level and Akamai shares falling after the bell)
By Caroline Valetkevitch
NEW YORK, July 27 (Reuters) - Wall Street suffered its worst day in eight weeks on Wednesday, hit by weak earnings, lackluster economic data and no movement in Washington talks as the deadline for a U.S. default looms.
The debt ceiling debate has grabbed much of investors' attention this week as the Aug. 2 deadline approaches, but it took a back seat for much of the day as the market reacted to earnings disappointments in industrial and technology sectors.
A profit warning from Juniper Networks
A late statement from White House that the government would be "running on fumes" if the debt ceiling isn't increased by the deadline added to selling. For details, see [ID:nN1E76P2HJ]
Besides a potential default on U.S. debt, the government could face a downgrade of its credit. The S&P 500 index <.SPX> has lost nearly 3 percent so far this week amid acrimonious debate about cutting spending and raising the debt limit.
"The market is beginning to show real concerns in terms of a default. I don't think it's going to happen ... (but) are we headed for a downgrade? That is becoming more of a possibility as each day goes by," said Peter Cardillo, chief market economist at Avalon Partners, in New York.
Many investors are opting to wait for the outcome of the talks before putting more money on the table.
"We haven't been committing new capital. We've been holding off on making any purchases over the last few days," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago. "If you multiply us by the other 10,000 money managers, you get a sense of why the market is getting a little soft."
Volume increased as the selling extended, a sign of weak conviction among investors. Nearly 14 stocks fell for every one that rose on the NYSE.
The Dow Jones industrial average <.DJI> was down 198.75 points, or 1.59 percent, at 12,302.55. The Standard & Poor's 500 Index was down 27.05 points, or 2.03 percent, at 1,304.89, and had its worst daily percentage decline since June 1. The Nasdaq Composite Index <.IXIC> was down 75.17 points, or 2.65 percent, at 2,764.79.
New orders for long-lasting U.S. manufactured goods fell unexpectedly in June, and a gauge of business spending plans slipped. [ID:nN1E76Q0BV] Also, the Federal Reserve's "Beige Book" report showed the pace of the recovery slowing in most districts surveyed, indicating the economy was not bouncing back as the year's second half began.
Moderating order growth at Emerson Electric Co
The CBOE Volatility Index <.VIX> rose 13.6 percent, gaining for a third day, and analysts said the index is pricing in the possibility of a U.S. credit downgrade. [ID:nN1E76Q1JX]
The S&P 500 fell below it's 50-day moving average. Analysts are eyeing the 200-day average near 1,283 as an area of support.
The S&P 500 and the Nasdaq have fallen for three straight days while the Dow fell for a fourth day.
The Emerson outlook came after troubling signs from
Caterpillar
Tech stocks, on the other hand, have been a bright spot so far this earnings period.
The overall mean change in S&P 500 technology earnings estimates for the second quarter is a positive 2.2 percent, the best of the 10 S&P sectors, according to Thomson Reuters StarMine data.
For a graphic on estimated earnings growth by sector
http://r.reuters.com/vuv52s
The latest earnings disappointments are "causing people to rethink their portfolios and move some stuff around, especially on the technology side," said Stifel Nicholas technology trader Adam Tracy in San Francisco.
After the close, shares of Akamai Technologies
Overall, some 8.69 billion shares changed hands on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 7.47 billion.
On the New York Stock Exchange, decliners outweighed advancers by about 14 to 1, while Nasdaq losers beat winners by roughly 7 to 1. (Additional reporting by Edward Krudy and Doris Frankel; Editing by Kenneth Barry)