Wall Street slips as recession worries nag

By Kristina Cooke

NEW YORK (Reuters) -U.S. stocks fell on Friday on weakness in manufacturing and financial stocks after bleak data on consumer confidence and construction, but the Dow still snapped a disastrous three-week losing streak with it best weekly gain in more than 5 years.

It was a week marked by extreme volatility, and Friday's trading was no different, with stocks swinging back and forth between positive and negative territory. A big afternoon rally was snuffed out in the last hour of trading as uncertainty took hold before the weekend.

Caterpillar and United Technologies led the Dow lower, after a report that U.S. housing starts, or the construction of new homes, fell to a 17-1/2-year low last month, adding to recession fears. Also weighing on manufacturers, Honeywell International Inc cut its fourth-quarter profit forecast and said it was bracing for "recessionary conditions" in the United States and Europe next year.

Retailers such as Wal-Mart fell after a report on U.S. consumer confidence from Reuters and the University of Michigan showed the steepest monthly drop on record in October.

A rally in energy stocks fizzled late in the day as oil prices settled off their highs for the session.

The Dow Jones industrial average fell 127.04 points, or 1.41 percent, to 8,852.22, while the Standard & Poor's 500 Index dropped 5.88 points, or 0.62 percent, to 940.55. The Nasdaq Composite Index slipped 6.42 points, or 0.37 percent, to 1,711.29.

For the week, the Dow rose 4.8 percent, its best week in 5-1/2 years, while the S&P 500 had its best week since February with a gain of 4.6 percent. The Nasdaq rose 4.1 percent for its best week since early August.

The week featured one of Wall Street's best days ever on Monday, followed by it worst day since the 1987 stock market crash on Wednesday.