Indices fell after the rally

The Dow Jones industrial average fell 0.94 percent, to 12,502.56, after reaching 12,621.77 a day ago, passing a record close of 12,582.59 set Jan. 16.

The Standard & Poor's 500 index dropped 1.13 percent, at 1,423.90 and the Nasdaq composite index was down 32.04, or 1.30 percent, at 2,434.24.

Some negative sentiment was generated by the release of a report from the National Association of Realtors that showed a much steeper than expected decline in existing home sales in the month of December.

Investors have wondered for months whether the housing sector and the broader economy could share a similar fate; that is, if a pullback in the housing market would drag down the rest of the economy.

Wall Street seemed to largely shrug off a Labor Department report that the number of Americans seeking unemployment benefits last week surged by the largest amount in 16 months, reversing two weeks of large declines.

European markets also seemed upset. FTSE 100 index was 0.73 percent lower at 6,269.3, the DAX index fell 0.43 pct to 6,719.58, the CAC 40 index slipped 0.51% to 5,609.20.