NEW YORK?Wall Street shares slumped Tuesday after a dismal housing report deepened fears for the recovery of the world's biggest economy.

The Dow Jones Industrial Average fell 133.96 points (1.32 percent) to 10,040.45 while the broader S&P 500 index dropped 15.49 points (1.45 percent) to 1,051.87, both extending a fourth session in the red.

The Dow briefly breached the highly symbolic and psychologically significant 10,000-point threshold just after the National Association of Realtors reported a massive drop in US existing home sales in July from a month earlier.

The tech-rich Nasdaq composite index slipped 35.87 points (1.66 percent) to 2,123.76.

Sentiment was dampened after the association said home sales plunged 27.2 percent in July to 3.83 million units.

The fall was more than double the percentage forecast of most analysts.

Sales are at the lowest level since the existing-home sales series was launched in 1999, and single-family home sales -- accounting for the bulk of transactions -- are at the lowest level since May of 1995, the association said.

Sales were also 25.5 percent below the 5.14 million-unit level in July 2009.

The report "is going to remain a drag on growth especially now that we start to see the slowdown return to US economy," Lindsay Piegza, analyst for FTN Financial, told AFP.

"You take that loss of momentum, you add in some very ugly job numbers last week and now some very ugly housing data, this is not setting a good sign that the US economy is on the mend."

New government data on unemployment and gross domestic product later this week are widely expected to further point to a downward economic trend.

On Monday, Wall Street closed in the red, wiping out early gains as reports of a number of large acquisitions were over-run by the general pessimism that has dominated the markets in recent weeks.

The grim economic outlook led to sharp drops in most components of the blue-chip Dow index on Tuesday.

Among losing stocks were aerospace giant Boeing, down 3.74 percent, aluminum producer Alcoa shedding 2.99 percent and tractor manufacturer Caterpillar slipping 2.69 percent.

Rio Tinto dropped 1.57 percent following a report that the mining giant was considering a takeover bid for Canada's Potash Corp after the world's largest fertilizer maker rejected a $40-billion bid from Rio Tinto rival BHP Billiton.

The bond market was higher as investors turned to safer investments.

The yield on the 10-year US Treasury bond was down to 2.499 percent from 2.607 percent Monday while that on the 30-year bond fell to 3.564 percent from 3.666 percent. Bond yield and prices move in opposite directions.