* Obama administration details plan to stem foreclosures
* Home builders dip as housing starts hit record low
* Caterpillar biggest drag on Dow as manufacturers drop
* Dow off 0.5 pct; S&P 500 off 0.7 pct; Nasdaq off 0.5 pct
* For up-to-the-minute market news, click [STXNEWS/US] (Updates to late afternoon, changes byline)
By Leah Schnurr
NEW YORK, Feb 18 (Reuters) - U.S. 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.
Caterpillar Inc (CAT.N) ,the world’s biggest maker of construction equipment, was the top drag on the Dow, down 2.3 percent to $28.30.
Shares of Deere & Co (DE.N) dropped more than 3 percent to $32.45 after the farm equipment maker posted a quarterly profit that missed forecasts and cut its outlook.
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. For more details, see [ID:nWAT011001].
The Dow Jones home construction index .DJUSHB shed nearly 5 percent, with Hovnanian Enterprises (HOV.N) down more than 8 percent at $1.19.
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 (GOOG.O) was among the top boosts, up 1.9 percent to $349.08.
Among financials, shares of Citigroup (C.N) declined 5.9 percent to $2.88. The S&P financial index .GSPF shed 1.1 percent, a day after falling to a 14-year low. (Editing by Leslie Adler)