* U.S. July existing home sales tumble 27 percent
* S&P, Nasdaq at 7-week low, Russell 2000 tests July low
* Indexes down: Dow 1 pct, S&P 1.2 pct, Nasdaq 1.4 pct
* For up-to-the-minute market news see []
(Updates to midafternoon, changes byline)
By Leah Schnurr
NEW YORK, Aug 24 (Reuters) - U.S. stocks slumped on
Tuesday, with the Dow and S&P 500 on track for a fourth day of
declines as an unexpectedly large drop in home sales last month
ratcheted up concerns about the economic recovery.
Sales of U.S. existing homes in July plummeted 27 percent
to their slowest pace in 15 years, an industry group reported.
The drop was twice as steep as expected. For details, see
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Home building and related stocks slipped but came off their
lows after hitting technical support. The PHLX housing index
<.HGX> fell 0.8 percent to 89.80, clawing back from a 3 percent
drop after it encountered support near its July low, right
above 87.
The housing sales was the latest data to suggest that the
pace of recovery is going to be much less robust than
anticipated, and investors fled the market in search of safer
bets.
Prices of U.S. Treasuries soared, sending two-year yields
to another record low. On the S&P 500, defensive plays telecoms
and utilities were the only sectors in positive territory.
"Clearly, today's economic report was another in a long
line of growing evidence that things are slowing for the
economy," said Michael Sheldon, chief market strategist at RDM
Financial, Westport, Connecticut.
"Investors were prepared for a weak existing home sales
report, but today's numbers blew the cover off the ball in
terms of how weak it actually was."
The Dow Jones industrial average <> fell 103.83 points,
or 1.02 percent, to 10,070.58. The Standard & Poor's 500 Index
<.SPX> lost 12.86 points, or 1.20 percent, to 1,054.50. The
Nasdaq Composite Index <> shed 30.50 points, or 1.41
percent, to 2,129.13.
The Russell 2000 index <> was down 1 percent at 596.90,
testing its July low of 587.67.
"A break below that level would see the February low at
580.49 as next support. If the index holds the July low, this
could be where the bulls step in," said Bryan McCormick,
derivatives analyst at optionMonster.com.
"The S&P 500 has a long way to go to its lows, with next
major support at the familiar 1,040 area. This would be a
fourth time down in three months and a fifth time this year. If
it holds, you might see a rally attempt," he said.
Merger and acquisitions activity continued to play a role
in the market, with news on takeover target 3PAR Inc.
Dell Inc <DELL.O> is preparing to sweeten its offer for
3PAR <PAR.N>, according to a Bloomberg report. The move comes a
day after Hewlett-Packard Co <HPQ.N> bid $1.6 billion for the
data storage company.
Shares of 3PAR gained 2.6 percent to $26.77, while Dell
fell 3.5 percent to $11.52. HP, a Dow component, slid 1.3
percent to $38.52. []
Medical device maker Medtronic Inc <MDT.N> plunged 10.6
percent to $31.29 after it reported first-quarter revenue fell
from the prior year and cut its outlook. The drop weighed on
shares of rival companies, and the health-care sector <.GSPA>
-- traditionally a defensive group -- fell 2 percent.
[]
Both the S&P and Nasdaq were at their lowest point in seven
weeks. The Dow was at its lowest level since July 20.
(Additional reporting by Angela Moon; Editing by Leslie
Adler)
