Wall Street slips on fears data point to weak recovery

NEW YORK (Reuters) - Stocks fell on Tuesday as data showed home sales last month missed even the most pessimistic estimates, confirming investor fears that the economic recovery is weak.

July U.S. existing home sales plummeted 27 percent, a drop that was twice as steep as expected.

"We have an equity market that is in a trading range. The ceiling of that range is dictated by the fact that you have all this data that are coming in consistently below expectations," said Hank Smith, chief investment officer at Haverford Trust Co in Philadelphia.

"While we don't expect a double-dip recession, it's hard to see over at least the next couple quarters getting out of this slow growth environment."

The Dow Jones industrial average was down 81.89 points, or 0.80 percent, at 10,092.52. The Standard & Poor's 500 Index was down 9.50 points, or 0.89 percent, at 1,057.86. The Nasdaq Composite Index was down 21.38 points, or 0.99 percent, at 2,138.25.

The Russell 2000 index was down 0.3 percent at 600.81, testing its July low at 587.67.

"A break below that level would see the February low at 580.49 as next support. If the index holds the July low, this could be where the bulls step in," said Bryan McCormick, derivatives analyst at optionMonster.com.

"The S&P 500 has a long way to go to its lows, with next major support at the familiar 1,040 area. This would be a fourth time down in three months, and a fifth time this year. If it holds, you might see a rally attempt," he said.

The PHLX housing index fell 0.2 percent to 90.32, recovering from a 3 percent drop earlier after it found support near its July low, right above 87.

Dell Inc is preparing to sweeten its offer for 3PAR Inc , according to a Bloomberg report. The move comes a day after Hewlett-Packard Co bid $1.6 billion for the data storage company.

Shares of 3PAR gained 2.6 percent to $26.77 while Dell fell 3.4 percent to $11.53 and HP, a Dow component, slid 1 percent to $38.67.

Medical device maker Medtronic Inc plunged 9.3 percent to $31.74 after it reported first-quarter revenue that fell from the prior year.

Discount retailer Big Lots Inc posted second-quarter earnings that barely beat expectations. It also raised its 2010 profit view, but the stock slid 2.7 percent to $30.89.

The Dow and S&P are on track for their fourth straight day of losses, and both the S&P and Nasdaq are at their lowest point in seven weeks. The Dow is at its lowest level since July 20.

U.S. Treasuries soared as investors shunned stocks, with the two-year yields to topping yet another record low.

(Additional reporting by Rodrigo Campos; Editing by Padraic Cassidy)