Home Sales Subdue Stocks

(Updated with Research in Motion earnings and stock prices.)

NEW YORK (TheStreet) -- Selling in housing, materials and commodity-related stocks stifled the major averages Thursday. Oil plunged more than $3 a barrel, and existing-home sales dropped unexpectedly.

The Dow Jones Industrial Average gave up 44 .11 points, or 0.4%, to 9707.44, while the S&P 500 shed 10.09 points, or 1%, to 1050.78. The Nasdaq Composite edged down 23.81 points, or 1.1%, to 2107.61.

Research in Motion(RIMM Quote) shares were recently falling 9% in post-close trading, after the Blackberry maker reported a 4% decline in second quarter earnings on a $112.8 million legal settlement charge.

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Meanwhile, a slide in commodities continued, with crude oil futures falling $3.08 to $66.07 a barrel a day after data showed an unexpected build in inventories. Gold dropped $15.50 to $999.80 an ounce. The Philadelphia Oil Service Sector Index and Gold and Silver Index fell 2.8% and 2.3%, respectively.

"The quarter is drawing to a close, there were no major surprises from the Fed, and I think institutions have continued to fuel the rally as they put [money] that's parked on the sidelines to work," says Peter Cardillo, chief market economist, Avalon Partners. "That's what it's all about, it's momentum buying based on the recovery story -- and the debate of the strength of the recovery."

That debate continued midmorning Thursday as the National Association of Realtors said existing-home sales fell to 5.1 million in August from 5.24 million the month prior, short of expectations for a rise to 5.35 million.

Home stocks Lennar(LEN Quote) and DR Horton(DHI Quote) fell 4.6% and 4.5%, respectively.

"Some of the giveback in closed sales appears to result from rising numbers of contracts entering the system, with some fallouts and a backlog contributing to a longer closing process, but the decline demonstrates we can't take a housing rebound for granted," said Lawrence Yun, NAR chief economist, adding that with an expected rise in foreclosures over the next year, an extension of the tax credit is "critical to preserve incentives for financially qualified buyers to enter the market."