Shares of building materials suppliers fall

Shares of building materials suppliers fell Tuesday after an analyst warned that the outlook for non-residential construction remains "challenging."

Goldman Sachs analyst Terry Darling, in a note, said "given on-going deterioration in fundamentals, risk of estimate downgrades, and the historical precedent of peak-to-trough declines of about 50 percent for highly exposed non-residential stocks in the last two cycles, we believe investors should remain cautious on the group."

The analyst said he expects spending declines next year of about 10 percent because of weak U.S. economic demand, rising unemployment and office vacancy rates and sharply tighter credit.

"Inflation of construction inputs remains rampant, substantially masking weakening construction volumes."

Meanwhile, the broader stock market extended its steep decline, a day after Wall Street's worst session in years, as nervous investors grappled with concerns about insurer American International Group Inc. and awaited the Federal Reserve's decision on interest rates.

Worries about the well-being of AIG have intensified after the several ratings agencies reduced their ratings on the company. Lower ratings can add to the amount of money the already cash-strapped company has to set aside. Investors are fearful that a failure by the world's largest insurance company would touch off a wave of financial turmoil.

In early trading, shares of USG Corp. fell 5 cents to $28.22, while shares of Weyerhaeuser Co. declined $2.08, or 3.7 percent, to $52.67.

Meanwhile, Masco Corp. dropped 65 cents, or 3.5 percent, to $17.96.