Stocks Slide As New Home Sales Fall

TIM PARADIS

NEW YORK (AP) — Signs of a weaker housing market and a gloomier outlook on the economy gave investors more reasons to dump stocks.

Major market indexes fell by the largest amount in about a month Wednesday 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, in 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 more risky in a tough economy and so they suffered 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 GDP is due Thursday. Economists are looking for growth at an annual rate of 3.3 percent after a record four straight quarters of contraction.