NEW YORK – U.S. stocks fell Wednesday after a report showed existing home sales fell to the lowest level in more than two years, stoking fears that consumer spending will slow, hurting economic and profit growth.
The Dow Jones industrial average was down about 41.94 points, or 0.37 percent, to end at 11,297.90. The Standard & Poor's 500 Index was down 5.83 points, or 0.45 percent, to finish at 1,292.99. The Nasdaq Composite Index was down 15.36 points, or 0.71 percent, to close at 2,134.66.
Shares of home builders, including Toll Brothers Inc. (TOL), and retailers such as Wal-Mart Stores Inc. (WMT) led the declines. The National Association of Realtors reported that sales of existing homes fell in July to their lowest level since January 2004.
An Iranian news agency said Tehran soon will announce a "very important achievement" in an unspecified area of nuclear technology, which added to the negative sentiment.
"The housing market doesn't seem to be cooling; it actually seems to be getting frigid," said Michael Metz, chief investment strategist at Oppenheimer & Co. in New York. "The weak data, combined with Iran, was more than enough to send the market lower."
Declines accelerated and the Nasdaq fell as much as 1 percent in early afternoon trading after the U.S. State Department said Iran's response to an incentives package aimed at defusing its nuclear standoff with the West fell "short" of U.N. demands.
"We saw some news about Iran and once that came across, we sold off a little more, but we have a negative tone anyway," said Joe Saluzzi at Themis Trading in Chatham, New Jersey.
A sharp drop in crude oil prices was not enough to offset the weak housing data and contributed to a decline in shares of actively traded energy companies such as Exxon Mobil Corp. (XOM), one of the biggest losers in both the Dow and the S&P 500.
Shares of home builder Toll Brothers dropped 2.6 percent, or 65 cents, to $24.55 on the New York Stock Exchange, while Wal-Mart shares fell 0.7 percent, or 31 cents, to $43.76.
The Dow Jones Home Construction Index was down more than 2 percent.
A slowdown in the housing sector has wide implications for the economy, affecting purchases of appliances and other household goods as well as contributing to consumers' sense of wealth.
"The housing data is bringing about concerns with regards to growth," said Michael Malone, trading analyst with Cowen & Co. in New York.
Shares of KB Home (KBH) fell 6.2 percent, or $2.66, to $40.53. Analysts at JP Morgan Securities downgraded the rating on the stock to "underweight" from "neutral."
Exxon Mobil dropped 0.8 percent, or 58 cents, to $69.63 as U.S. crude oil for October delivery slid $1.34 to settle $71.76 a barrel on the New York Mercantile Exchange. The U.S. government reported a surprising increase in gasoline inventories, easing supply concerns.
An S&P index of energy companies' shares lost 1.4 percent.