Stocks sink after weak housing news, lower GDP

Stocks were moderately lower in quiet pre-holiday trading Tuesday amid further signs that the housing market and overall economy are still struggling.

The Commerce Department reported third-quarter gross domestic product, a measure of the economy that tallies the value of goods and services, fell at an annual rate of 0.5%. That was in line with analysts' expectations and matched the government's estimate of a month ago.

Reports also showed that home sales fell in November.

Sales of existing homes plunged 8.6% in November to a seasonally adjusted annual rate of 4.49 million, from a revised 4.91 million rate in October, according to the National Association of Realtors.

New-home sales fell 2.9% to a seasonally adjusted annual sales pace of 407,000 units, a weaker performance than economists had expected and was the slowest sales pace since January 1991. The median price of a new home sold in November was $220,400, a drop of 11.5% from the sales price a year ago.

While the readings show further weakness, investors have likely already priced in very low expectations. The concern, however, is that the current quarter will be much worse.

Trading volume was light, and is expected to remain so the rest of this week as investors head into the holidays. Analysts are mindful that light volume tends to skew the market's movements, and warned that this week may not suggest any long-term trends.

"Don't read too much into the numbers until the end of the day, we're really in a holding pattern right now," said Ryan Larson, head of equity trading at Voyageur Asset Management. "It is a very quiet news week, and much of it has already been priced into the market."

At the close of trading, the Dow Jones industrial average fell 100, or 1.2%, to 8,420.

Broader indexes also declined. The Standard & Poor's 500 index shed 8, or 1%, to 863. The Nasdaq composite index fell 11, or 0.7%, to 1,522.

In corporate news, greeting-card company American Greetings am said it swung to a third-quarter loss, hurt by hefty charges and a decline in sales.

Commercial financial firm CIT Group said Tuesday it received preliminary approval to obtain $2.33 billion as part of the government's $700 billion bank investment program.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude fell on the New York Mercantile Exchange.

Overseas, Japan's Nikkei stock average rose 1.57%. Hong Kong's Hang Seng index fell 2.75%.