Stocks end lower on slower growth concerns

NEW YORK, Dec 21 (Reuters) US stocks dropped on Thursday as concerns that economic growth could be slowing faster than expected dented optimism about corporate profits.

Reports that showed a contraction in regional business activity and a downward revision in GDP data overshadowed a fresh flurry of corporate takeovers.

Leading the blue-chip Dow average lower were shares of companies considered to be economic bellwethers, including aluminum producer Alcoa Inc., heavy equipment maker Caterpillar Inc. and industrial conglomerate United Technologies Corp.

At noon, the Federal Reserve Bank of Philadelphia reported that its December index of business activity fell more than expected. That followed November's modest gain.

Before Wall Street's opening bell, the Commerce Department reported a downward revision in its estimate of third-quarter growth in gross domestic product. The data stirred concerns that the economy may be slowing down, and along with it, the trend of steadily rising profits also may falter.

''We are looking at a situation where economic numbers have to come down even further in terms of expectations,'' said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank Private Wealth Management in New York.

The Dow Jones industrial average was down 42.62 points, or 0.34 percent, to end at 12,421.25. The Standard & Poor's 500 Index was down 5.22 points, or 0.37 percent, to finish at 1,418.31. The Nasdaq Composite Index was down 11.76 points, or 0.48 percent, to close at 2,415.85.

GDP, which is the output of all goods and services within U.S. borders, grew at an annual rate of 2 percent in the third quarter -- slower than the previous estimate of 2.2 percent, the Commerce Department reported.

Adding to negative sentiment, Richmond Federal Reserve Bank President Jeffrey Lacker said in a speech in Charlotte, North Carolina, that inflation remained the main risk facing the U.S. economy.

Those concerns overshadowed earlier enthusiasm prompted by a fresh wave of takeovers and a drop in oil prices.

Among deal news, cellphone maker Motorola Inc. said it planned to buy digital video technology company Tut Systems Inc. for about $39 million to bolster its Internet-based video business.

Motorola shares were down 0.4 percent, or 9 cents, at $20.32 on the New York Stock Exchange, while Tut shares jumped 16.5 percent, or 16 cents, to $1.13 on the Nasdaq.

Shares of Exxon Mobil fell 0.3 percent, or 21 cents, to $75.87 on the NYSE, in sync with falling crude prices. On the New York Mercantile Exchange, February crude dropped $1.06 to settle at $62.66 per barrel.

On the Nasdaq, the top drags included the stock of Web search leader Google Inc., down 1.5 percent, or $6.70, at $456.20. Google earlier failed to hold above its 60-day moving average, a key technical gauge of a stock's resiliency.

Alcoa's stock slid 2.5 percent, or 74 cents, to $29.30 on the NYSE, while Caterpillar shares fell 0.9 percent, or 56 cents, to $60.81 and United Technologies stock lost 0.7 percent, or 46 cents, to $62.76.

Trading was moderate on the NYSE, with about 1.36 billion shares changing hands, below last year's daily average of 1.61 billion, while on Nasdaq, about 1.76 billion shares traded, below last year's daily average of 1.80 billion.

Declining stocks outnumbered advancing ones by a ratio of 10 to 7 on the NYSE and by 17 to 13 on Nasdaq.

REUTERS PKS RN0352