Stocks slide following report of pending home sales drop

Wall Street lurched through another erratic session Tuesday as investors clung to hopes for an interest rate cut and grappled with the possibility of further trouble for the housing market and mortgage lenders like Countrywide Financial Corp.

The National Association of Realtors said Tuesday its index tracking pending U.S. home sales fell 2.6 percent in November, a larger decline than the market expected. The home sales report followed last week's disappointing readings on employment and manufacturing, and the three reports fed the market's hopes that the Fed will continue its campaign of rate cuts to prevent the U.S. economy from slipping into a downturn. The Fed meets next Jan. 29-30.

But jitters about Countrywide and KB Home, which posted a disappointing fourth quarter loss, kept Wall Street on edge. Comments by President Bush reiterating the problems facing the economy likely added to the market's uneasiness.

In late afternoon trading, the Dow Jones industrial average fell 69.50, or 0.54 percent, to 12,757.99 after ratcheted up and down, as it did in Monday's session.

Broader stock indicators also rose. The Standard & Poor's 500 index fell 2.20, or 0.16 percent, to 1,413.98, and the Nasdaq composite index declined 2.17, or 0.09 percent, to 2,497.29.

All three indexes are down substantially so far this year.