Weak GDP data, Yahoo weigh on Wall Street

NEW YORK (Reuters) - Stocks declined on Wednesday after a report showing weaker-than-expected economic growth underscored worries about a recession and Yahoo Inc (YHOO.O) forecast 2008 revenue below expectations.

The government said gross domestic product -- the broad measure of economic activity -- increased less than expected in the fourth quarter. The report offset earlier news on jobs data from the private sector that topped analysts' expectations.

Internet media company Yahoo reported a drop in quarterly profit and forecast 2008 revenue below Wall Street's expectations. Its shares were down 10 percent at $18.73 on Nasdaq.

Investors braced for the Federal Reserve's interest-rate decision later in the session, with most expecting a rate cut of 50 basis points.

The Dow Jones industrial average (.DJI) was down 69.09 points, or 0.55 percent, at 12,411.21. The Standard & Poor's 500 Index (.SPX) was down 8.27 points, or 0.61 percent, at 1,354.03. The Nasdaq Composite Index (.IXIC) was down 12.42 points, or 0.53 percent, at 2,345.64.

Shares of Merck and Co (MRK.N) fell 3.7 percent to $46.15 and led declines on the Dow and S&P 500 after the drug maker reported a fourth-quarter loss due to charges from a costly settlement related to its arthritis drug, Vioxx, which was withdrawn.

(Agencies)