* Retailers, housing data weigh on markets
* Third-quarter GDP contracts in line with expectations
* GM falls for second day on bailout worries
* Dow off 1.2 pct, S&P off 1 pct, Nasdaq off 0.7 pct
* For up to the minute market news, please click on
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(Updates to close)
By Leah Schnurr
NEW YORK, Dec 23 (Reuters) - U.S. stocks fell in thin
trading on Tuesday on further deterioration in the housing
market, while worry over weak consumer spending hurt retailers
in the final stretch of the Christmas shopping season.
General Motors <GM.N> fell hard for a second day as
investors worried if last week's $17.4 billion aid package
from the U.S government will be enough to keep Detroit's big
automakers from bankruptcy. GM, which helped drag the Dow to
its fifth straight daily decline, dropped almost 15 percent
and has lost a third of its value since Friday, when the
bailout was announced.
A batch of data earlier in the day showed sales of new and
existing homes fell again, and the U.S. economy contracted in
the third quarter, thanks to the biggest drop in consumer
spending in 28 years.
"The GDP did continue to contract, which was negative for
the market," said Jocelynn Drake, market analyst at
Schaeffer's Investment Research in Cincinnati, Ohio.
"However, with light trading and how the Fed has moved in
to really bolster the market, I think that's really going to
keep us from having large swings at this point."
Retailers' stocks slipped after a survey showed stores had
their lowest turnout in at least six years during the last
weekend before Christmas, traditionally one of the busiest
times of the year. Shares of department store operator Macy's
<M.N> fell more than 6 percent.
The Dow Jones industrial average <> lost 100.28
points, or 1.18 percent, to 8,419.49. The Standard & Poor's
500 Index <.SPX> slid 8.47 points, or 0.97 percent, to 863.16.
The Nasdaq Composite Index <> shed 10.81 points, or 0.71
percent, to 1,521.54.
With just five trading days remaining in the year, the
broad S&P 500 is down more than 41 percent for the year. The
annual decline is surpassed only by the 47.1 percent fall in
1931, when the country was mired in the Great Depression.
Both the Dow and the S&P 500 closed at their lowest levels
in nearly three weeks. Volume was expected to be light
throughout the week, shortened by the Christmas holiday on
Thursday. Markets will close early on Wednesday for Christmas
Eve.
Dow component GM lost 14.8 percent to $3.00 as enthusiasm
over the government bailout evaporated. On Monday, an analyst
at Credit Suisse said the automaker's equity could be largely,
if not entirely, wiped out as it complies with the
restructuring targets outlined in the U.S. government's rescue
package. Ford <F.N> was down 15.4 percent at $2.19.
In more evidence of the deteriorating housing market, data
showed the pace of existing home sales plunged a record 8.6
percent in November and new-home sales fell 2.9 percent last
month. For details, see []
Analysts say stability in the housing sector is key to any
recovery in the U.S. economy, which has been in a recession
since late last year.
Gross domestic product figures showed the U.S. economy
contracted at an annual rate of 0.5 percent, as economists had
expected. [] The market's focus has shifted to
the current fourth quarter, which is expected to be much
weaker.
Retailers were in the spotlight with Christmas
approaching. A survey released on Tuesday showed just 38.7
percent of Americans went shopping during the final weekend
before Christmas -- usually among the busiest shopping
weekends of the year.
The S&P Retail index <.RLX> fell 1.4 percent. Macy's lost
6.8 percent to $8.71, while JC Penney <JCP.N> fell 3.3 percent
to $18.15.
American Greetings <AM.N> was the latest company to say it
couldn't give an outlook due to the deteriorating economy,
while it reported a third-quarter loss. [] The
greeting card company's stock dove 34.8 percent to $6.40.
Volume was low on the New York Stock Exchange, with about
984.5 million shares changing hands, well below last year's
estimated daily average of roughly 1.9 billion, while on the
Nasdaq, about 1.33 billion shares traded, sharply below last
year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by
a ratio of about 3 to 2, while on the Nasdaq, nearly two
stocks fell for every one that rose.
(Editing by Jan Paschal)
