Stocks sell off as recovery staggers

Gloomy economic data in the U.S. and disappointing bank earnings in Canada weighed on North American financial markets Tuesday.

In Toronto, the S&P/TSX composite index closed down 161.3 points, or 1.4 per cent, to 11,557.3.

In New York, the Dow Jones industrial average was down as much as 183 points earlier in the day before paring its losses and ending down 133.96 points, or 1.3 per cent, to 10,040.45.

The Nasdaq composite index lost 35.87 points, or 1.7 per cent, to end at 2,123.76, while the S&P 500 index was down 15.49 points, or 1.5 per cent, to 1,051.87.

It was the Dow's first dip below 10,000 in seven weeks.

In the U.S., the National Association of Realtors reported that sales of previously occupied homes plunged in July to their lowest level in more than a decade, after a homebuyer tax credit expired at the end of April.

Sales dropped a record 27.2 per cent from June to an annual rate of 3.83 million units. Many economists had expected a drop of 12 per cent.

 "In short, home sales were eye-wateringly weak in July and suggest that the double-dip in house prices that we warned about at the start of the year is just around the corner," said Capital Economics U.S. economist Paul Dales.

The Canadian dollar closed down 0.72 of a cent, to 94.31 cents US. 

Oil below $72 US

The October crude contract on the New York Mercantile Exchange fell $1.47 to $71.63 US a barrel. Prices have fallen more than $9 since the beginning of August on concerns about slowing demand.

The December bullion contract moved up $4.60, to $1,234.40 US an ounce.

On the Toronto Stock Exchange, bank and insurance stocks fell after earnings from the Bank of Montreal came in at $1.14 a share, below expectations of $1.21.

The CIBC will report earnings on Wednesday while National Bank and Royal Bank release results on Thursday.

Statistics Canada reported that retail sales edged up 0.1 per cent to $35.9 billion in June, which was below the 0.4 per cent rise economists expected.