The U.S. economic data was in-line with expectations as the National Association of Realtors said existing home sales fell 1.7% in September to a seasonally adjusted annual rate of 4.75 million in September. That's up 11% from the 4.28 million-unit pace seen in September 2011.

Total housing inventory at the end September fell 3.3% to 2.32 million existing homes available for sale, which represents a 5.9-month supply at the current sales pace, down from a 6-month supply in August.

"Despite occasional month-to-month setbacks, we're experiencing a genuine recovery," said Lawrence Yun, the chief economist at NAR.

The S&P 500 decreased 24 points, or 1.66%, to settle at 1433, but added 0.32% for the week. The Nasdaq saw the deepest decline, falling more than 67 points, or 2.19%, to close at 3006. The tech-heavy index lost 1.26% for the week.

The S&P 500 remains up just shy of 14% year-to-date, while the Nasdaq holds a gain of 15.37%.

Every sector was in the red with conglomerates, technology and basic materials suffering the steepest losses.

Decliners outpaced advancers by a 3.4-to-1 ratio on the New York Stock Exchange and a 4.2-to-1 ratio on the Nasdaq. Volume totaled 3.87 billion on the Big Board and 2.22 billion on the Nasdaq.

"Between now and year end, we see largely range-bound equity markets and higher volatility," said Jordan Waxman, managing director at Hightower. "The backdrop is that on the one hand, the environment for stock investing is benign, as interest rates and inflation are low, corporate profits are healthy and valuations are not stretched. However, earnings growth is decelerating -- some of which is not yet forecasted by the analyst community -- and there is still plenty of slack in labor and housing, uncertainty over the fiscal picture in the U.S. and over the health of sovereigns abroad."

The FTSE 100 in London closed down 0.35% and the DAX in Germany fell 0.76%. The Nikkei Average in Tokyo finished up 0.22% and the Hong Kong Hang Seng closed up 0.15%.

December crude oil futures fell $2.05 to close at $90.05 a barrel. December gold futures plunged $20.70 to settle at $1,724 an ounce.

The benchmark 10-year Treasury rose 19/32, diluting the yield to 1.771%. The greenback was up 0.36%, according to the dollar index.

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