Stocks Dive on Housing Market Weakness

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stock market tradersA record plunge in existing-homes sales last month sent equity investors skittering toward safety Tuesday, pushing the Dow to a triple-digit loss.

Despite bargain pricing in many regions of the country and record-low mortgage rates, the housing market remains a source of concern for investors as evidenced by Tuesday's trading. July sales of previously occupied homes dropped more than 27%, the National Association of Realtors said Tuesday. That's the sharpest monthly drop for total existing-home sales on record going back to 1999, with declines being seen in every region of the U.S., the NAR said.

The Dow Jones Industrial Average ($INDU) lost 136 points, or 1.3%, to finish at 10,039. The blue-chip index was off as much as 183 points during the session, putting it briefly below the 10,000 level.

The broader S&P 500 ($INX) fell 15 points, or 1.5%, to 1,053. The more volatile, tech-heavy Nasdaq Composite ($COMPX) shed 36 points, or 1.7%, to settle at 2,124.

In a flight to safety, bids flowed into the bond market. The yield on the benchmark 10-Year Treasury fell below 2.5% for the first time since 2009. (Bond yields move in the opposite direction of their prices.)

Seasonally adjusted existing-home sales for July came in at a 3.83-million-unit annual rate, well below economists' average estimate of 4.65 million. June existing-home sales were revised down to 5.26 million from 5.37 million.

Home resales reached a 5.66 million annual rate in May and have been sliding ever since, hurt by the end of the home-buyer tax credit on April 30.

Still, Tuesday's batch of dismal economic news is unlikely to break the market's months-long range-bound pattern, said John Stoltzfus, market strategist with Ticonderoga Securities.

"Until the market finds a catalyst or catalysts to commit to and be driven at length by -- either up or down -- we expect rallies will be bookended by sell-offs with negative to positive to negative to positive offsets driving action that grows increasingly short in duration in any one direction," Stoltzfus told clients in a Tuesday report.

Volume was once again light as many market participants are traditionally away on late August vacations. The market has been trading in a range around 1,080 on the S&P 500 since mid-May. See the chart below:

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S&P 500 2,271.31 7.62 0.34%
DJIA 19,827.25 94.85 0.48%
NASDAQ 5,555.33 15.25 0.28%
DAX 11,630.13 33.24 0.29%
HANG SENG 22,885.91 -164.05 -0.71%
NIKKEI 225 19,137.91 65.66 0.34%
USD (per EUR) 1.07 0.00 0.01%
USD (per CHF) 1.00 0.00 0.02%
JPY (per USD) 114.53 0.01 0.00%
GBP (per USD) 1.24 0.00 0.01%

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