NEW YORK - Stocks dipped in choppy trading on Wednesday as data pointing to yet more weakness in housing suggested the recession is worsening, offsetting a search for bargains following Tuesday's big market slide.

Data showed U.S. housing starts and building permits dropped to record lows in January, with construction plans scrapped as unsold houses stood empty.

Drags included shares of financial companies, big manufacturers and home builders with the market stuck at three-month lows. All 10 components of the Dow Jones home construction index <.DJUSHB> were negative, with Hovnanian Enterprises down more than 6 percent.

The housing data overshadowed the unveiling of President Barack Obama's plan pledging up to $275 billion to stem foreclosures, which was met with some skepticism.

Investors worried the plan would be no quick fix and there was uncertainty about how it would work.

If there was more detail as to how the housing plan would be implemented, the market would have a clearer reaction, said Joe Arsenio, president of Arsenio Capital Management in Larkspur, California.

The market is attempting to form another bottom but sentiment has eroded even further since the election, on the assumption that plans would be in more precise and understandable form by this time.

The Dow Jones industrial average <.DJI> fell 25.48 points, or 0.34 percent, to 7,527.12. The Standard & Poor's 500 Index <.SPX> lost 3.81 points, or 0.48 percent, to 785.36. The Nasdaq Composite Index <.IXIC> declined 3.00 points, or 0.20 percent, to 1,467.66.

Nasdaq was cushioned by bargain hunting, as investors snapped up shares of big cap technology companies. Google , up 1.7 percent to $348.59, was the top boost.

But shares of luxury home builder Toll Brothers fell 4.2 percent to $17.15 while D.R. Horton declined 3.8 percent to $8.58.

Among financials, shares of Citigroup declined 4.6 percent to $2.92. The S&P financial index <.GSPF> shed 0.7 percent, a day after it fell to a 14-year low.

Shares of Deere & Co dropped 2.7 percent to $32.60 after the farm equipment maker posted a quarterly profit that missed forecasts and slashed its outlook.

Shares of other big manufacturers also slid, with Caterpillar Inc among the top drags on the Dow, off 1.9 percent to $28.42.

(Editing by James Dalgleish)

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