Stocks slide as home sales dip

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By Tim Paradis ASSOCIATED PRESS

NEW YORK | Major market indexes fell Wednesday by the largest amount in about a month after the Commerce Department said new home sales dropped for the first time in five months. Sales slid 3.6 percent in September to 402,000. Analysts had expected an increase.

The Dow Jones Industrial Average lost 119 points, or 1.2 percent, its third straight triple-digit drop.

The Nasdaq Composite Index fell 2.7 percent, while the Russell 2000 Index of smaller companies tumbled 3.5 percent. Many of the stocks in both indexes are considered riskier, so they saw some of the biggest losses.

The retreat came as Goldman Sachs Group Inc. reduced its expectation for the nation's economic output for the July-September period. Goldman Sachs predicts third-quarter gross domestic product rose at an annual rate of 2.7 percent, weaker than its earlier forecast of 3 percent.

The government's report on third-quarter gross domestic product is expected Thursday. Economists are looking for growth at an annual rate of 3.3 percent after a record four straight quarters of contraction.

The day's slide signaled that investors were reassessing their hopes for a recovery in the economy. Demand for safe havens like Treasuries rose, as did stocks of companies whose business is expected to fare better in a slump. Stocks of consumer staples companies like Procter & Gamble Co., which makes Tide detergent and Gillette razors, edged higher.

Energy, financial and retail stocks posted some of the biggest losses.

Analysts said the market's slide in the past week isn't surprising given the size of the advance in the past eight months and mixed economic readings.

The Dow's drop was the biggest for stocks since Oct. 1, when traders grappled with worries about jobs and manufacturing.

The Dow fell 119.48, or 1.2 percent, to 9,762.69. The Standard & Poor's 500 Index fell slid 20.78, or 2 percent, to 1,042.63. The Nasdaq dropped 56.48, or 2.7 percent, to 2,059.61.