By Deepa Seetharaman
NEW YORK (Reuters) - Stocks fell in thin volume on Tuesday, shedding earlier gains after housing data showed a steep drop in home values and continued concerns about the U.S. economy weighed on retailers and energy companies.
A spate 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.
Energy companies' shares fell as crude oil tumbled as much as 5.3 percent on concerns for the U.S. economy, the world's biggest energy consumer. Retailers' stocks slipped after a survey showed stores had their lowest turnout in at least six years during the last weekend before Christmas.
Housing data continued to be at the forefront of investors minds after 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.
"When it comes to housing, until that turns, until we can get the foreclosures to stop, we're not seeing any new home buyers," said Neil Massa, senior U.S. trader at MFC Global Investment Management, in Boston. "We really need to see that for a turnaround."
The Dow Jones industrial average <.DJI> slipped 44.29 points, or 0.52 percent, to 8,475.48. The Standard & Poor's 500 Index <.SPX> declined 4.12 points, or 0.47 percent, to 867.51. The Nasdaq Composite Index <.IXIC> fell 10.75 points, or 0.70 percent, to 1,521.60.
With just six trading days remaining in the year, there is little hope the markets will avoid having their worst yearly performance since the 1930s. The S&P 500 is down about 40 percent for the year.
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.
But the latest figures show that home sales have been knocked down yet again and the national median price for existing homes dropped 13.2 percent on an annual basis, the largest drop on record.
The Dow Jones U.S. Home Construction Index <.DJUSHB> slid 1.9 percent, dragged down by NVR Inc
Investors grappled with U.S. gross domestic product figures that 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.
The S&P 500 index of energy stocks <.GSPE> declined 0.4 percent after U.S. February crude oil futures slipped 38 cents to $39.53 a barrel on continued concerns about the weakening economy. Earlier in the day, NYMEX February crude hit a contract low of $37.79, drop of 5.3 percent. For details, see [ID:nSYD138699]
Nabors Industries Ltd
Retailers remained in focus in the last few days before the Christmas holiday, after 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. Percentagewise, that's a drop from 41.6 in 2007, according to the survey by America's Research Group and UBS.
The S&P Retail index <.RLX> fell 0.8 percent. U.S. department store operator Macy's stock
On the Nasdaq, retailer Bed Bath & Beyond
American Greetings
(Editing by Jan Paschal)
