Stocks posted their biggest declines since Oct. 1 on Wednesday as worries about the recovery gripped the market.
The Dow Jones Industrial Average shed 119.48, or 1.2 percent, to close at 9,762.69. The S&P 500 lost 2 percent and Nasdaq dropped 2.7 percent.
The CBOE volatility index, widely considered the best gauge of fear, jumped to just shy of 28. The gauge had been inching toward 20 before the recent selloff.
The data today backed up those fears: New-home sales dropped 3.6 percentin September and August's gain was revised lower. Economists had expected sales to rise. That piled on to the bad news for the housing sector after an earlier report showed mortgage applications fall for the third week in a rowlast week.
And Goldman Sachs slashed its forecast for third-quarter GDP to 2.7 percent from 3 percent. The government's first read on Q3 GDP is due out on Thursday.
Investors shrugged off a report that showed durable-goods orders rose 1 percentin September, though compared to last year fell more than 24 percent.
Financials and materials were among the day's biggest decliners as the dollar strengthened.
Alcoa , Caterpillar and Intel were the biggest drags on the Dow. Telecoms AT&T and Verizon were at the top of the pack.
Oil fell, settling at $77.46 a barrel, after a report showed crude inventories rose by just 778,000 barrels last week. Economists had expected a 1.7 million build. Gold dropped nearly $5, settling at $1,029.90 a troy ounce.
The Treasury's five-year auction today was met with decent demand but it wasn't as strong as the other auctions this week. Tomorrow is the seven-year auction.
Investors also shrugged off some earnings beats: ConocoPhillips reported a sharp drop in earnings and revenue from a year earlier but still beat expectations.
Visa beat on both earnings and revenue with its results after the bell Tuesday, and raised its dividend.
The tech-heavy Nasdaq was the hardest hit of the three indexes, down 2.7 percent, as investors have begun to unwind some of their recovery trades in tech and consumer discretionary. Those sectors were among the hardest hitin yesterday's session.
Intel lost 3.6 percent, Apple dropped 2.5 percent and Microsoft shed 2 percent.
Verizon and Motorola advanced as the pair debuted their new phone that uses Google's Droid software. The phone goes on sale Nov. 6, priced at about $200 after rebate.
Garmin fell a whopping 16 percent as the Google phone also includes a free app for GPS navigation, Gizmodo reports.
The Nasdaq is now lower for October, though the Dow and S&P 500 are still higher for the month.
A tale of two IPOs today: Vitamin Shoppe shares soared 6 percent after the vitamin chain's IPO priced above expectations. It's the first retailer to go public in two years. But Addus Homecare fell more than 15 percent in its debut on the Nasdaq after pricing below expectations.
Apollo Group dragged on the Nasdaq, tumbling 18 percent, as federal regulators opened a probe into the educational group's accounting and at least three brokerages downgraded the stock.
AstraZeneca shares fell 1.5 percent as the company pulled its experimental lung-cancer drug Zactima from the regulatory submission process, after the drug demonstrated no survival advantage when added to chemotherapy.
Still to Come:
THURSDAY: 80th anniversary of 1929 market crash; Weekly jobless claims; first look at Q3 GDP; Larry Summers speaks in NYC; Earnings from AstraZeneca, ExxonMobil, P&G, Aetna, Kellogg, Motorola and Sprint Nextel
FRIDAY: Personal income and spending; consumer sentiment; Earnings from Chevron
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