ON WALLSTREET
In New York, stock selling accelerated through the close, with the Dow ending at a three-month low as worries about the global economic outlook overshadowed a bigger-than-expected rise in existing home sales.
The Dow Jones industrial average slid 126.82 points, or 1.2%, to 10,066.57, closing at the lowest point since Feb. 2
The S&P 500 index skidded 14.04 to 1,073.65. The Nasdaq composite index fell 15.49 points to 2,213.55
Stocks had fallen in the early going, turned mixed through the afternoon and then turned lower near the close.
The housing market report marked a positive start to a busy week for economic news. Investors are looking for evidence that the U.S. economy is holding up despite the turmoil abroad. More housing reports were due later in the week.
Readings are also due on durable goods orders, personal income and spending, and consumer sentiment.
Nonetheless, the positive report was countered by continued worries about the European debt crisis. The euro slumped, erasing last week's gains, following reports that Spain's central bank took over a long-established regional savings bank.
Stocks ended higher Friday at the end of another rough week, in which worries about the European debt crisis and the flailing euro sent global markets lower. For the week, the Dow and S&P 500 both lost around 4% and the Nasdaq fell around 5%.
Stocks have been down more aggressively since hitting rally highs in late April. Since that time, the Dow has lost 9%, the S&P 500 has slipped 10.6% and the Nasdaq has dropped 11.9% through Friday's close.
Prior to Friday's advance, all three major indexes were down more than 10% off the highs, meeting the technical definition of a correction. The selling has also raised worries about whether stocks are heading into a bear market, technically a decline of 20% to 30% off the highs.
Economically speaking, April existing home sales rose 7.6% to a seasonally adjusted 5.77 million annual unit rate from a 5.36 million unit rate in March, the National Association of Realtors reported shortly after the start of trading.
Economists surveyed by Briefing.com expected a smaller rise to 5.65 million units. The rise was due largely to the expiration of the homebuyer tax credit at the end of April.
In corporate news, AIG will not face criminal charges, with the Justice Department opting not to pursue the case due to insufficient evidence.
In deal news, IBM is reportedly buying AT&T's business software unit Sterling Commerce for $1.6 billion U.S. in cash.
Financial stocks slipped, including Dow components Bank of America and JPMorgan Chase Other big losers included PNC Financial Services, Wells Fargo, Goldman Sachs and Morgan Stanley.
The KBW Bank index lost 2.2%.
Treasury prices slipped, lifting the yield on the 10-year note to 3.22% from 3.20% where it stood late Friday. Treasury prices and yields move in opposite directions.
The price of a barrel of oil sank a penny to $70.03 U.S.
Gold prices gained $17 to $1,193 U.S. an ounce
ON BAYSTREET
Canadian markets were shut down for the Victoria Day holiday.
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