US stocks fell to their lowest level in seven weeks on Tuesday as an unexpectedly large drop in home sales ratcheted up concerns that the economic recovery is even weaker than had been feared. The Dow and S&P 500 racked up their fourth day of losses in a row after an industry group reported that sales of US existing homes in July fell to their slowest pace in 15 years.
With housing a linchpin of the US consumer economy, the latest data cast doubt on the pace of recovery and added fuel to investors' recent search for safety. Economically sensitive companies were the biggest drags on the Dow, including plane maker Boeing, which fell 3.7 percent to $60.93. Banks were also among hardest hit shares, with the KBW Bank index down 2.2 percent.
Home building and related stocks slipped but came off their lows after hitting technical support. The PHLX housing index fell 1.1 percent to 89.53, clawing back from a 3 percent drop after it encountered support near its July low, right above 87. The Dow Jones industrial average fell 133.96 points, or 1.32 percent, to 10,040.45. The Standard & Poor's 500 Index shed 15.49 points, or 1.45 percent, to 1,051.87. The Nasdaq Composite Index lost 35.87 points, or 1.66 percent, to 2,123.76.
The broad Russell 2000 index was down 1.2 percent at 595.59, but held above its July intraday low of 587.67. A report that at least seven of the 17 top Federal Reserve officials at the US central bank's August policy meeting had reservations about the decision to buy more Treasuries also rattled investors.
Some bargain hunting helped the indexes ease off lows. The S&P approached short-term oversold levels, dropping below 35 on the 14-day relative strength index. A level of 30 indicates the index could be oversold. The S&P also fell below its lower Bollinger band at around 1,053. Medical device maker Medtronic Inc plunged 10.8 percent to $31.21 after it reported a decline in quarterly sales and cut its outlook. Merger and acquisitions activity continued to play a role in the market, with news on take-over target 3PAR Inc.
Dell Inc is preparing to sweeten its offer for 3PAR, according to a Bloomberg report. The move comes a day after Hewlett-Packard Co bid $1.6 billion for the data storage company, topping Dell's original offer.
Shares of 3PAR gained 3.6 percent to $27.04, while Dell fell 3 percent to $11.59. HP, a Dow component, slid 1.7 percent to $38.39. All three indexes closed at their lowest level in seven weeks. About 8.38 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq. Although volume was below last year's estimated daily average of 9.65 billion, it was the best in almost two weeks. The stronger volume on a day of losses could add to the bearish argument. Declining stocks handily outnumbered advancing ones on the NYSE by 2,286 to 730, while on the Nasdaq, decliners beat advancers 1,965 to 670.