Stocks fall after sales of existing homes decline

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

The sales drop was a reminder that the housing market, and the overall economy, is still far from healthy. And that persuaded many stock investors to cash in some of their gains from a rally that began last week.

Investors were also absorbing a mixture of earnings reports from names like Ford Motor Co., which reported a big loss, and Dow Chemical Co., which said higher costs for raw materials sent earnings down sharply. But drug makers Bristol-Myers Squibb Co. and Eli Lilly & Co. both reported higher earnings as the weak dollar boosted foreign sales, and Amazon.com Inc. turned in a solid report that beat expectations.

Analysts have said that so far, the second-quarter earnings reports have been better than many investors expected. That had lifted the market's mood in recent sessions.

In midmorning trading, the Dow Jones industrial average fell 137.76, or 1.18 percent, to 11,494.62. The blue chip index rose nearly 170 points the past two days, so a pullback as part of the normal ebb and flow of trading wouldn't have come as a surprise.

Broader stock indicators also declined Thursday. The Standard & Poor's 500 index fell 10.84, or 0.85 percent, to 1,271.35, and the Nasdaq composite index declined 23.16, or 1.00 percent, to 2,302.72.

Stocks rose sharply the past two sessions as the price of oil continued its decline. The price is now down more than $20 after just weeks ago hitting a record above $147 a barrel. Oil rebounded Thursday, however with a barrel of light, sweet crude rising 86 cents to $125.30 on the New York Mercantile Exchange.

Bond prices rose Thursday after the housing report sent some investors looking for the safety of government debt. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.06 percent from 4.12 percent from late Wednesday.

The dollar was mixed against other major currencies, while gold prices rose.

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