NEW YORK - Stocks eased in choppy trading on Wednesday as data pointing to yet more weakness in housing suggested the recession is deepening, offsetting a round of bargain-hunting 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.
Laggards included shares of financial companies, big manufacturers and home builders, with the market stuck at three-month lows.
Shares of Deere & Co
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.
There aren't a lot of specifics, running into the same problem as you did with Geithner and his speech a week ago, said Al Goldman, chief market strategist at Wachovia Securities in St. Louis.
The biggest problem in the market, in my opinion, is a major lack of confidence and disappointment that the current administration really hasn't done anything yet about the toxic assets held by banks.
The Dow Jones industrial average <.DJI> was off 34.00 points, or 0.45 percent, to 7,518.60. The Standard & Poor's 500 Index <.SPX> gave up 5.37 points, or 0.68 percent, at 783.80. The Nasdaq Composite Index <.IXIC> was down 7.34 points, or 0.50 percent, at 1,463.32.
Since the beginning of the year, the broad S&P 500 is down more than 13 percent, and after having risen 20 percent from the late November lows, it is now up about 4 percent from that mark. Tuesday's sharp drop took indexes closer to the bear market lows and prompted some bargain-hunting Wednesday.
Adding to the bleak economic outlook, the Federal Reserve said it had slashed its economic forecast for 2009, now seeing a likely decline in output, and considered setting an inflation target to hone its actions to pull the economy out of recession.
The Dow Jones home construction index <.DJUSHB> shed nearly 5 percent, with Hovnanian Enterprises
Shares of luxury home builder Toll Brothers
Losses on the Nasdaq were cushioned as investors snapped up shares of big cap technology companies, which are seen as having more wherewithal to withstand the economic downturn. Google
Among financials, shares of Citigroup
(Editing by Leslie Adler)