Stocks in New York were lower out of the gate on Friday, with the S&P dipping below its November low, as investors winced at a greater government stake in Citigroup and a worse-than-thought GDP reading for the end of the year.

The

Dow Jones Industrial Average

fell 115 points, to 7067. The

S&P 500

was off by 16 points, to 737, reaching below its November 20th intraday low of 747.78. The

Nasdaq

declined 16 points to 1375.

Sentiment sagged Friday after a Commerce Department report showed the U.S. economy contracted at whopping 6.2% annualized pace at the end of 2008, the worst figure in a quarter-century, as the country sinks deeper into recession.

The economy shriveled faster than the government's preliminary estimate, which predicted a 3.8% decline. It was also noticeably worse than the 5.4% annualized decline economists expected.

The other big news Friday morning was that beleaguered

Citigroup

(C) - Get Report

said

it reached a deal with the U.S. government

in which it will convert $25 billion of the $45 billion in emergency bailout money that it has already pledged to Citi from preferred shares into common shares in return for a 36% stake in the bank.

Investors worried about the dilution of their positions, sent shares plummeting 33% to $1.56 in premarket trading. The government also gave Citigroup the opportunity to seek additional government funding or for the conversion to common shares of the remaining $20 billion in federal bailout money it received late last year.

Banks were the strong suit Thursday, while prospective budget cuts hurt healthcare stocks, which helped to lead the market lower, despite the financials. Investors largely overlooked a trio of worse-than-expected economic data early Thursday, but more indicators will be available Friday, with the Chicago purchasing managers index and University of Michigan consumer sentiment index on tap, as well as the weekly leading index for last week.

In commodities, oil fell $2.35 to $42.87, while gold added $16.40 to $959 an ounce.

Longer-dated Treasuries were recently on the uptick; the 10-year note was rising 15/32 to yield 2.9%, the 30-year was higher by 19.5/32, yielding 3.6%.

The dollar was slightly weaker against the yen, and stronger vs. the pound and euro.

Stocks abroad were mixed. The FTSE in London and the DAX in Frankfurt were up 1% to 3%, after Japan's Nikkei and Hong Kong's Hang Seng ended with losses.