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CNBC ON DIGG

Stocks Slide, Led by GM, Financials

Companies:Unisys Corp | Ford Motor Company | General Motors Corp | ALCOA Inc | Nasdaq Stock Market, Inc.

By: CNBC.com | 23 Dec 2008 | 12:43 PM ET

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Stocks skidded Tuesday, as a quick mood booster from an upbeat consumer sentiment reading wore off, and the drag of GM and financials set in.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

Volume was expected to be thin again today ahead of Wednesday's shortened trading session and Thursday's Christmas holiday.

Asian stocks ended lower as many investors closed their books and went away for the holidays while European shares were cautiously higher in thin trading.

In its third and final reading on third-quarter GDP, the Commerce Department held its estimate at minus-0.5 percent. Economists expect that the economy deterioriated further in the fourth quarter, projecting a decline of as much as 6 percent.

FOR INVESTORS

Not surprisingly, the PCE price index was revised downward, to 5 percent from 5.2 percent, showing prices rose less than at first expected.

>> By the Numbers: Where the Economy Is Growing

Stocks are almost guaranteed to log their worst year since the 1930s, though they'll go out on a soft note, not a cymbal-clashing crescendo, as volatility subsides. The CBOE Volatility index has plunged to numbers it hasn't seen since late September, shortly after the collapse of Lehman Brothers.

And, it showed in consumers' mood: Sentiment rose to 60.1 in December from an upwardly revised 59.1 in the prior month, according to a University of Michigan and Reuters poll. November was initially pegged at 55.3.

News on the housing market was, not surprisingly gloomy: New-home sales slowed to the slowest pace since 1991, falling 2.9 percent to an annual rate of 407,000 in November. It was lower than the 420,000 rate economists had expected, as was the downward revision to the prior month. Still, the median-sale price rose.

Meanwhile, the pace of existing-home sales plunged a record 8.6 percent to a 4.49-million-unit rate last month, and the median home price fell for a fifth straight month.

Some value in stocks may emerge next year despite a "disaster" first half for the economy, as mining stocks, commodities and emerging markets are likely to stage a rebound, well-known bear Marc Faber, editor of the Gloom, Boom and Doom Report, told CNBC.

General Motors [GM Loading... () ] shares tumbled more than 15 percent after Standard & Poor's Ratings Services and Moody's Investors Service downgraded ratings on Chrysler and Ford [F Loading... () ]. S&P said it believes "the bankruptcy risk remains high" for GM and Chrysler, as well as for Ford Motor, for next year.

Financials rounded out the top drags on the Dow, with Bank of America [BAC Loading... () ] and Citigroup [C Loading... () ] off more than 3 percent.

>> Track all 30 Dow stocks.

Shares of Unisys [UIS Loading... () ] jumped more than 7 percent after the IT-services company said late Monday that it would cut 1,300 jobs and suspend matching contributions to its U.S. 401(k) plan, resulting in cost-savings of $225 million.