US STOCKS-Wall St trips on retailers, dismal corporate news

                                
 * Walgreen reports earnings below forecast
                                
 * Manpower withdraws fourth-quarter outlook
                                
 * Retailers fall on worries over consumer spending
                                
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[STXNEWS/US]
 (Updates to midday, changes byline)
                                
 By Deepa Seetharaman
                                
 NEW YORK, Dec 22 (Reuters) - U.S. stocks slipped on Monday
as disheartening corporate earnings news further battered
investor sentiment and retailers fell on worries about
Christmas sales.
                                
 One of the country's largest drug store chains, Walgreen Co
<WAG.N>, posted smaller-than-expected earnings and the largest
U.S. staffing company, Manpower Inc <MAN.N>, withdrew its
fourth-quarter profit forecast.
                                
 The S&P U.S. Retailers Index <.RLX> shed more than 4
percent as investors worried that sales for the last weekend
before the Christmas holiday had been meager.
                                
 "You went into the season with everything against the
retailers and back-to-back storms probably put another nail in
the coffin of retailers," said Jim Awad, chairman of W.P.
Stewart & Co in New York.
                                
 The Dow Jones industrial average <.DJI> shed 35.53 points,
or 0.41 percent, at 8,543.58. The Standard & Poor's 500 Index
<.SPX> lost 13.14 points, or 1.48 percent, at 874.74. The
Nasdaq Composite Index <.IXIC> fell 33.00 points, or 2.11
percent, at 1,531.32.
                                
 With just seven trading days remaining in the year, there
is little hope for the markets to avoid having their worst
yearly performance since the 1930s. The S&P 500 is down 39.5
percent for the year.
                                
 Investors also contended with further negative news on the
critical housing market, as U.S. banking regulators said the
rate of home owners defaulting after their loans have been
modified is rising and shows no signs of leveling off.
[ID:nN22499733]. An improvement in the housing market is seen
as key to reinvigorating the U.S. economy.
                                
 The Dow Jones U.S. Home Construction Index <.DJUSHB> fell
about 4 percent, led down by Toll Brothers <TOL.N>, which fell
5.3 percent to $20.55.
                                
 "The underlying news remains weak in terms of earnings and
progress on the economy," Awad said. "I wouldn't discount a
Santa Claus rally but...I wouldn't put a lot of substance in
it."
                                
 Walgreen also said it was opening fewer stores than it
previously planned as consumers curbed spending. Its shares
fell more than 5 percent to $24.77 on the New York Stock
Exchange. For details, see [ID:nN22332438]
                                
 Manpower, the world's No. 2 staffing company, withdrew its
profit outlook, citing light demand for temp workers due to the
spreading global recession, sending its shares down more than
16 percent to $30.49. [ID:nBNG170987].
                                
 Caterpillar Inc <CAT.N> edged down 2.3 percent to $41.70
after the U.S. heavy equipment maker said it would cut
white-collar pay by up to 50 percent and offer buyouts to some
employees as it seeks to trim costs. [ID:nN22499439]
                                
 The stock was the No. 2 drag on the Dow.
                                
 Toyota Motor Co <7203.T><TM.N>, the world's biggest
automaker, forecast its first group operating loss and said it
was impossible to predict how severely the current
"unprecedented emergency" would cut the global demand for cars
next year. [ID:nT299128]
                                
 U.S.-traded shares of Toyota were down 4.7 percent to
$61.37.
                                
 A Credit Suisse analyst said the equity of General Motors
Corp <GM.N> may be wiped out as it complies with the
restructuring targets laid out in the federal auto bailout.
Shares of GM, a Dow component, fell nearly 17 percent to
$3.88.
                                
 Retailers also buckled under dwindling consumer demand.
J.C. Penney Inc <JCP.N> shed 6.3 percent to $18.67, and Liz
Claiborne Inc <LIZ.N> lost more than 8 percent to $2.95.
                                
 On the Nasdaq, Apple <AAPL.O> and Google <GOOG.O> were
among the top drags. Apple dropped 4.6 percent to $85.85 and
Google fell 3.6 percent to $299.07.
 (Editing by Leslie Adler)