* New home sales data heightens recovery worry
* Financial, tech, materials sectors fall hard
* Dow off 1.2 pct; S&P 500 off 2 pct; Nasdaq off 2.7 pct
* For up-to-the-minute market news, click []
(Updates to close, changes byline)
By Ellis Mnyandu
NEW YORK, Oct 28 (Reuters) - U.S. stocks tumbled in a broad
sell-off on Wednesday, sending the benchmark S&P 500 lower for
a fourth straight day, after weak data on new home sales
heightened concerns about the pace of the economic recovery.
Financials, technology, materials and industrial sectors,
which underpinned the market's advance from March, bore the
brunt of the slide as investors reassessed their bets.
"The housing data definitely created an additional leg down
in the market," said Mike O'Rourke, chief market strategist at
institutional brokerage firm BTIG in New York. "A lot of people
realize that we're correcting right now and are being
cautious."
The Nasdaq also logged its fourth straight daily drop.
Wednesday's sell-off marked the broader market's worst day of
losses in nearly a month.
The S&P 500 is now up 54.1 percent from the 12-year closing
low of March 9. At Wednesday's close, it showed a drop of 5.04
percent from its post-March closing peak reached a week ago on
Oct. 19.
The Dow Jones industrial average <> dropped 119.48
points, or 1.21 percent, to 9,762.69. The Standard & Poor's 500
Index <.SPX> fell 20.78 points, or 1.95 percent, to 1,042.63.
The Nasdaq Composite Index <> slid 56.48 points, or 2.67
percent, to 2,059.61.
The CBOE Volatility Index <.VIX>, Wall Street's favorite
fear gauge, ended up 12.5 percent, its biggest one-day
percentage gain since August.
During the session, both the S&P 500 and the Nasdaq broke
below key technical levels as the sell-off accelerated. Both
indexes closed below their 50-day moving average for the first
time since July, a bearish technical signal.
Among financials, JPMorgan <JPM.N> shares fell 2.8 percent
to $42.68, American Express Co <AXP.N> dropped 3.6 percent to
$34.67, and the S&P financial index <.GSPF> shed 3.2 percent.
On the technology front, Apple Inc's <AAPL.O> slid 2.5
percent to $192.40 made the iPod maker the Nasdaq's top drag.
The Dow Jones U.S. home construction index <.DJUSHB> fell
5.5 percent -- its worst one-day percentage slide since May.
The S&P materials index <.GSPM> dropped 3.2 percent.
Among shares of natural resource companies, Dow component
and aluminum company Alcoa Inc <AA.N> tumbled nearly 7 percent
to $11.93, while another Dow stock, heavy equipment maker
Caterpillar Inc <CAT.N>, fell 4 percent to $54.43. Diversified
manufacturer 3M Co <MMM.N> shares dropped 2 percent to $74.46.
Sales of newly built single-family homes unexpectedly fell
3.6 percent last month, according to a Commerce Department
report. Seperately, data from the Mortgage Bankers Association
showed demand for mortgages has fallen for the past three
weeks. []
The housing data was an additional hurdle for a market
already buffetted by uncertainty about the future of the
government's $8,000 home buyer tax credit.
The tax credit for first-time home buyers would be extended
until the end of April and expanded to cover repeat buyers
under a deal reached by key senators, sources familiar with the
plan said on Wednesday. []
The housing data underscored the stickiness of the real
estate downturn amid a tough job market, tighter lending and
sliding home values.
Goldman Sachs cut its forecast for third-quarter gross
domestic product, a gauge of all goods and services produced
within the U.S. borders, to 2.7 percent from 3.0 percent.
The government will release its first estimate of
third-quarter GDP on Thursday. GDP is expected to have grown at
an annual rate of 3.3 percent in the third quarter, according
to 77 analysts polled by Reuters.
(Editing by Jan Paschal)
