* Debt ceiling debate, earnings worries hurt sentiment
* Apple weighs on Nasdaq, down for 3rd session in a row
* December retail sales suggest stronger consumer spending
* Indexes down: Dow 0.2 pct, S&P 0.3 pct, Nasdaq 0.6 pct
By Leah Schnurr
NEW YORK, Jan 15 (Reuters) - U.S. stocks fell on Tuesday on
worries over the debate brewing in Washington over raising the
U.S. borrowing limit, while Apple's stock extended its fall on
concerns of weaker demand for its products.
Economic data offset some of the negative tone after retail
sales rose more than expected in December. But manufacturing
activity in New York state contracted for the sixth month in a
row in January.
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
"The concern is just the uncertainty and the negotiating
going down to the last minute," said John Fox, co-manager of the
FAM Value Fund, in Cobleskill, New York.
Apple fell for the third day in a row, weighing on
the Nasdaq after reports on Monday of cuts to orders for iPhone
parts. Apple was down more than 2 percent at $491.96. The stock
fell below $500 for the first time in almost a year on Monday.
The Dow Jones industrial average slipped 29.55
points, or 0.22 percent, to 13,477.77. The Standard & Poor's 500
Index fell 4.35 points, or 0.30 percent, to 1,466.33. The
Nasdaq Composite Index gave up 18.82 points, or 0.60
percent, at 3,098.68.
Although Tuesday's economic data was mostly positive,
reaction in the market was likely to be limited since investors'
attention centered on the negotiations over the debt ceiling and
spending cuts, said Hugh Johnson, chief investment officer of
Hugh Johnson Advisors LLC in Albany, NY.
"'Fiscal Cliff Two' is now the principal focus of
investors," he said.
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 1.9 percent from a year ago, Thomson Reuters
Homebuilder Lennar reported a sharp rise in
quarterly profit, but the stock fell 2.2 percent to $40.11 on
worries that growth in orders was slowing.
Shares of Dell rose 3.1 percent to $12.67 the day
after sources said the company is in talks with private equity
firms on a potential buyout.
Facebook added 0.6 percent to $31.11 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