Stocks slide for 2nd straight day
Wall Street slumps as existing home sales report shows a surprise slide. S&P 500 down about 2% in two days.
NEW YORK (CNNMoney.com) -- Stocks slumped Thursday, falling for the second straight session, as a surprise drop in existing home sales and tumbling commodity prices gave investors a reason to sell into a rally that pushed the major gauges to one-year highs.
The Dow Jones industrial average (INDU) lost 41 points, or 0.4%. The S&P 500 (SPX) index fell 10 points, or 1%. The Nasdaq composite (COMP) declined 24 points, or 1.1%.
Declines were broad based, with 2 out of every 3 Dow stocks sliding, including GE (GE, Fortune 500), Alcoa (AA, Fortune 500), Bank of America (BAC, Fortune 500), Chevron (CVX, Fortune 500), Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Hewlett-Packard (HPQ, Fortune 500) and United Technologies (UTX, Fortune 500).
Stocks gained in the early going after the Labor Department reported that jobless claims fell for the third week in a row. But the market abandoned gains after the housing report. A slide in oil and gold shares on the back of a stronger dollar dragged on commodity stocks.
Stocks slipped Wednesday, falling from almost one-year highs, after the Federal Reserve kept interest rates unchanged and essentially maintained its recent economic outlook. A week ago, Fed chief Ben Bernanke said the recession was very likely over, but the labor market still has a long way to go.
In the short term, "there's not a whole lot of bad news that could derail equities," said Robert Siewert, portfolio manager at Glenmede. "But the rally since March has been the sharpest since the 1930s and it's not surprising to see occasional pullbacks."
However, Siewert said that longer term, there are a lot of headwinds that could challenge stocks, with 2010 likely a tougher year for equities. He cited challenges including the eventual rising of taxes, the labor market weakness, the still-tight credit market and the struggle of a consumer that chooses to save at the expense of personal spending.
Friday brings government reports on new home sales and durable goods orders, as well as the University of Michigan's September consumer sentiment index
Housing: Existing home sales fell to a seasonally adjusted 5.1 million unit rate in August from a 5.24 million unit rate in July, according to a report from the National Association of Realtors. Economists surveyed by Briefing.com forecast that sales would rise to a 5.3 million unit rate in the month.
Jobs: A report from the Labor Department showed weekly jobless claims fell for the third week in a row. The number of Americans filing new claims for unemployment fell to 530,000 last week from a revised 551,000 in the prior week. Economists thought claims would rise by 5,000.
Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 6,138,000 from 6,261,000 in the previous week. Economists expected a rise.
IPOs return: Shares of A123 Systems (AONE) surged as much as 56.6% from their initial pricing, before trimming the gain to just over 50% at the close. The company, one of a small group of electric-car battery makers, raised $380 million in an initial public offering Wednesday that priced above forecasts. The company trades under the ticker symbol AONE.
A123 was one of 5 companies that went public Thursday, the biggest day for the IPO market since Nov. 15, 2007, when 6 debuted.
Among the other debuts, online pharmacy Vitacost.com (VITC) was little changed Thursday and asset management firm Artio Global Investors (ART) added 4.8%.
Two REITs also debuted: Apollo Commercial Real Estate Finance (ARI), which fell 7.5% Thursday, and Colony Financial (CLNY), which fell 2.5%.
Three more IPOs are due by the end of the week and eight over the next two weeks. The recharged market could be seen as another indicator that a broader economic recovery is taking hold. Alternately, it could attest to how few financing options are available to companies.
Other company news: Rite Aid (RAD, Fortune 500) reported its ninth consecutive quarterly loss Thursday morning, although the results were not as weak as analysts had expected. However, the drugstore chain also said it would see a wider fiscal-year loss than it initially thought because of falling sales.
Shares fell 12.3%.
Among other movers, Chelsea Therapeutics (CHTP) tumbled 60% after its experimental drug to treat a neurological disorder showed disappointing results in a late-stage trial.
One-year highs: The major indexes ended Tuesday's session at the highest levels since just after the collapse of Lehman Brothers last September.
Since bottoming at a 12-year low March 9, the S&P 500 has gained 56.8% and the Dow has gained 48.9%, as of Thursday's close. After hitting a six-year low, the Nasdaq has gained 68%.
The stock advance was driven by signs that the economy is slowly starting to recover -- and by extraordinary amounts of fiscal and monetary stimulus.
Despite predictions of a big September selloff, stocks have seen only modest pullbacks that have been met with renewed buying.
Fed: The Federal Reserve said Thursday it was dialing down a pair of emergency programs in the wake of an improving economy. The central bank is cutting back the amount of money available to banks under the Term Auction Facility, a short-term loan program.
The Fed is also pulling back on a program that lets investment banks trade bad debt for safe Treasury debt.
G-20 summit begins: The Group of 20 leading developed and emerging countries are meeting in Pittsburgh to discuss financial reforms in the wake of the global financial market collapse. It is the third such meeting, following earlier events in April and last November.
World markets: Global markets were mostly lower. In Europe, London's FTSE 100 lost 1.2%, while France's CAC 40 and Germany's DAX both lost around 1.7%. Asian markets ended lower, with the exception of the Japanese Nikkei.
Currency and commodities: The dollar gained versus the euro and the yen. The greenback has repeatedly hit one-year lows against a basket of currencies over the last few weeks.
A stronger dollar hit dollar-traded commodities, including oil and gold.
U.S. light crude oil for October delivery fell $3.08 to settle at $65.98 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery fell $15.50 to settle at $998.90 an ounce. Gold closed at a record high of $1,020.20 last week.
Bonds: Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.38% from 3.41% late Tuesday. Treasury prices and yields move in opposite directions. 
