U.S. stocks fell for a second day after fighting broke out between North and South Korea

U.S. stocks fell for a second day after fighting broke out between North and South Korea and raised concerns that Europe's crisis of debt and China's efforts to tame inflation will slow global economic recovery.

PulteGroup Inc. and D.R. Horton Inc., the two largest U.S. builders, fell at least 3.1 percent after a report showed home sales trailed estimates. Adobe Systems Inc. fell 3.4 percent after Morgan Stanley said analysts' estimates for the first half of fiscal year 2011 may be too high. Brocade Communications Systems Inc fell 9.8 percent as the largest manufacturer of switches for data storage networks forecast earnings that missed analysts' estimates.

500 Standard & Poor's fell 1.5 percent to 1180.09 as of 14:37 in New York, and earlier fell 1.8 percent, the most since Aug. 11. The Dow Jones industrial average lost 163.36 points, or 1.5 percent to 11,015.22.

"It is a day of fear," said Don Wordell, a fund manager at Atlanta-based management RidgeWorth Capital, which oversees about $ 62 billion. "There are concerns in Europe of the debt, the tension in Korea, the hedge fund research, a weak housing report. There is a huge amount of bad news to absorb. That will not encourage risk appetite."

The S & P 500 has fallen 3.7 percent since reaching a maximum of two years on 5 November amid concern crisis of debt in Europe is intensifying and growing speculation that China will raise rates interest. The decline cut indicator rally this year to 5.8 percent.

Korea clash

European and Asian stocks tumbled, sending the MSCI World Index lower for the ninth time in 12 days, as North Korea has sent "several" artillery in South Korea near the border of the two Western nations, Joint South Korea's Joint Chiefs of Staff, said in a statement. South Korea returned fire with 80 missiles and fighter jets scrambled as President Lee Myung Bak, pledged to respond "sternly."

"A more bubbles of the tensions in Korea is another layer of uncertainty for markets that do not need to address," said Tim Schroeders, who helps manage about $ 1 billion in Pengana Capital Ltd. in Melbourne. "It is not enough going on without having to deal with geopolitical tensions erupt.'s Probably just another trigger point for people to sell."

Spain risked a "major bank run" unless European officials act quickly to calm the financial turmoil in the nation, Pacific Investment Management Co. Co-Chief Investment Officer Mohamed A. El-Erian said in a radio interview on  surveillance with Tom Keene.

"The bleeding deposits'

"The numbers so far have shown that the Irish banking system has been bled deposits," said El-Erian. "It will seriously undermine the prosperity of this country for a generation. The first thing to do is run as announced this weekend -. That is a great package of foreign aid and the steps by the Irish Government"

Stocks held decreased after the National Association of Realtors report showed the purchase of existing homes fell 2.2 percent to an annual rate of 4.43 million last month from 4.53 million in September. Economists had projected sales would fall to a pace of 4.48 million, according to the median forecast in our News survey. The median price fell 0.9 percent from a year earlier.

The S & P 500 Supercomposite Homebuilding Index fell 2 percent in 11 of its 12 members refused. PulteGroup fell 3.1 percent to $ 6.30, while DR Horton slid 3.3 percent to $ 10.07.

Shares held losses within minutes of the last Federal Reserve meeting showed policy makers were not agreed to extend the monetary stimulus registration.

Most Fed officials at the meeting of November 2 to 3 additional purchases of securities was the maintenance of asset prices, low interest rates and boost, the Fed said in minutes of the meeting released today Washington.

Abobe, Brocade

Adobe fell 3.4 percent to $ 28.20. The graphics software maker is facing a slow pace of corporate updates since the introduction of its new Creative Suite software 5, Morgan Stanley analyst Adam Holt wrote in a note.

Brocade Communications tumbled 9.8 percent to $ 5.14 after the company said it expected fiscal first-quarter earnings of 9 cents to 10 cents per share, below analysts estimates of 14 cents average .

Measures of energy and raw materials producers dropped most among the 10 groups in the S & P 500, after a fall in commodity prices on concern about slowing global demand.

Freeport-McMoRan Copper & Gold Inc. fell 3.5 percent to $ 98.44. Exxon Mobil Corp. lost 2 percent to $ 68.77.

GDP expands

Today separate Commerce Department report showed the U.S. economy grew at a rate of 2.5 percent in the third quarter, faster than previously estimated. Economists in a survey expected growth of 2.4 percent.

"The U.S. economy is in better shape," said Walter Todd, chief investment officer of Co-head of Greenwood, South Carolina-based Greenwood Capital, which oversees about $ 900 million. "However, the market is very skittish. Investors are reacting to the news on a daily basis. Considering all the risks out there, the stock may be depressed, with volatility increasing."

The benchmark for options on U.S. stock rose 14 percent to 20.95. The VIX, as the Chicago Board Options Volatility Index is known, measures the cost of using options to hedge against S & P 500 declines. The index has fallen by more than half since the peak of this year of 45.79 in May.