* Apple weighs on indexes in third straight session of losses
* Debt ceiling debate, earnings worries hurt sentiment
* December retail sales suggest stronger consumer spending
* Indexes down: Dow 0.11 pct, S&P 0.17 pct, Nasdaq 0.46 pct
NEW YORK, Jan 15 (Reuters) - U.S. stocks fell on Tuesday on continued selling of tech heavyweight Apple and concerns over the brewing fight in Washington over raising the U.S. debt ceiling.
Apple fell for the third day in a row as the biggest drag on both the S&P 500 and Nasdaq 100 after reports on Monday of cuts to orders for iPhone parts. Apple was down nearly 3 percent at $487.50 after hitting a session low of $485.60, its lowest level since February.
A government report that retail sales rose more than expected in December was seen as a favorable sign for fourth-quarter growth and helped to limit losses. However, a separate report showed manufacturing activity in New York state contracted for the sixth month in a row in January.
Stocks' decline is "in part the result of the weight that Apple has on the market overall, particularly the indexes. It also has a large impact on investor psychology because it has been such a darling and such an overperformer," said Peter Kenny, Managing Director at Knight Capital in Jersey City, New Jersey.
"But the market is shifting some of their focus towards the data release regarding U.S. retail sales where we got a lot more clarity on today."
On Monday, President Barack Obama rejected any negotiations with Republicans over raising the U.S. debt ceiling. The United States could default on its debt if Congress does not increase the borrowing limit.
Resolving the debt ceiling debate is more a question of how than if. Investors don't expect a U.S. default, but they are also wary of another eleventh-hour agreement like the one in August 2011.
"If you were to look at a hurdle, the easiest one to look at is the debt ceiling because it's really going to underscore and underline with bold ink this protracted, institutionalized political battle in Washington," Kenny said.
The Dow Jones industrial average dipped 14.45 points, or 0.11 percent, to 13,492.87. The Standard & Poor's 500 Index shed 2.47 points, or 0.17 percent, to 1,468.21. The Nasdaq Composite Index lost 14.25 points, or 0.46 percent, to 3,103.25.
An expected lackluster earnings season also kept investors from taking aggressive bets. Analyst estimates for the quarter have fallen sharply since October. S&P 500 earnings growth is now seen up just 1.8 percent from a year ago, Thomson Reuters data showed.
Homebuilder Lennar reported a sharp rise in quarterly profit, but the stock fell 1.8 percent to $40.30 on worries that growth in orders was slowing. The PHLX housing sector index edged down 0.09 percent.
Express Inc surged 20.8 percent to $16.99 as the biggest percentage gainer on the New York Stock Exchange after the apparel retailer raised its fourth-quarter and full year 2012 outlook.
Shares of Dell rose 1.3 percent to $12.45 the day after sources said the company is in talks with private equity firms on a potential buyout.
Facebook added 0.8 percent to $31.18 ahead of a major news event at its headquarters. The secretive nature of the event has triggered a guessing game about what the company could unveil.