Stocks tumble after sales of existing homes fall

NEW YORK — Wall Street abruptly ended an earnings-driven rally and closed sharply lower today after a steeper-than-expected decline in existing home sales and worries about the financial sector chilled the market's recent optimism.

The major indexes fell about 2 percent, including the Dow Jones industrial average, which fell 283.10, or 2.4 percent, to 11,349.28.

Microsoft, one of the 30 Dow stocks, fell 99 cents to close at $25.44 a share. Boeing, also a Dow stock, tumbled $4.19 to a 52-week low at $62.53 after an analyst's negative report.

The pullback erased the nearly 170 points added in the two prior sessions. Last week, the Dow gained nearly 400 points. While some declines after the latest rally wouldn't have come as a surprise, the drop Thursday revealed fresh unease about the economy.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 29.65, or 2.3 percent, to 1,252.54. A jump in Amazon.com shares helped contain declines in the technology-heavy Nasdaq composite index, which fell 45.77, or 1.97 percent, to 2,280.11. Amazon shares soared $8.18 to $78.72.

The National Association of Realtors said existing home sales resumed their decline in June after a slight rebound in May. Sales declined by 2.6 percent in June, well beyond the 1 percent drop economists had forecast.

Homebuilders and financial companies were among the steepest decliners Thursday because they have both struggled with the declining housing market.

Alan Lancz, director at investment research group LanczGlobal, said investors are concluding that while financials had been oversold and were due for a rebound, problems remain with tight credit and souring mortgage debt.

"You have the rally and you almost get the hangover now where you say, 'You know, we're not out of the woods yet,' " Lancz said.