S&P 500 has longest decline since July amid concern over Europe

The recent selloff in stock prices continued on Wednesday as concerns about the situation in Europe kept buyers on the sidelines.

The Dow Jones Industrial Average fell for the fourth consecutive session, down 44.04 points to 13,413.51. The Nasdaq Composite Index dropped 24.03 points to 3,093.70, and the S&P 500 Stock Index fell 8.27 points to 1,433.32.

Protester violence in Spain and Greece over austerity programs rekindled concerns about the economic future of the euro region. The news offset a report on new homes sales showing the median price of a home sold in August was $256,900, up 11.2 percent over the previous month, the biggest one-month increase in history.

Commodity prices fell on concerns about Europe. Gold fell $12.80 to $1,753.60 an ounce. Oil dropped to the lowest level in more than a month, down $1.39 to $89.98 a barrel.

PulteGroup Inc. (NYSE: PHM) dropped 4.7 percent, helping to give homebuilders their biggest decline since June, after new homes sales missed estimates. Energy and technology companies dropped the most among the benchmark gauge’s 10 industry groups as oil fell to a seven-week low and Jabil Circuit Inc. (NYSE: JBL) tumbled 9.9 percent amid a disappointing forecast.

“We’re at a point where stimulus continues to be added, and yet we’re seeing no meaningful improvements in the global economy,” said Sean Lynch, the Omaha, Neb.-based global investment strategist for Wells Fargo Private Bank, which oversees $169 billion. “When you figure in some of the political risks along with Spain and Greece leading headlines once again, it makes equity investors want to pause right now.”

Equity indexes fell Tuesday from their highest levels in almost five years as Federal Reserve Bank of Philadelphia President Charles Plosser said new bond buying announced by the Fed this month probably won’t boost growth or hiring. The S&P 500 has erased all its gains since the Federal Open Market Committee said Sept. 13 that it will undertake a third round of quantitative easing by purchasing mortgage-backed securities at a pace of $40 billion per month until labor markets “improve substantially.”

Optimism that central banks around the world will take steps to boost economic growth has sent the S&P 500 up 14 percent this year. The European Central Bank this month approved unlimited bond-buying programs while the Bank of Japan unexpectedly increased its asset-purchase target.

“The Fed cheerleading and stimulus has lulled investors into a sense of complacency that the Fed can keep the economy afloat and growing,” said Eric Thorne, who helps oversee about $6 billion at Bryn Mawr Trust Co. in Bryn Mawr, Pa. “We’re afraid when reality sets in that this economic recovery may take longer than expected. The market could pull back quickly and meaningfully.”

The S&P 500 has rallied 5.2 percent so far in the third quarter, and pension funds may need to sell stocks this week to rebalance their asset allocations, according to UBS AG ( NYSE: UBS) strategist Boris Rjavinski. U.S. pensions, which UBS estimates hold about 55 percent of their $5 trillion in stocks, may pull as much as $36 billion from equities and put as much as $19 billion into fixed income, Rjavinski wrote in a note to clients dated Sept. 24. The largest outflows will be from stocks of large U.S. companies, with as much as $21 billion being sold, the strategist said.

The decline in stocks prompted investors to seek protection against losses, driving up the cost of options for a third day. The Chicago Board Options Exchange Volatility Index, known as the VIX, climbed 8.9 percent to 16.81.

Energy shares in the S&P 500 slipped 0.9 percent. Crude futures erased 1.5 percent as the U.S. government reported lower oil demand. Noble Corp. (NYSE: NBL) retreated 2.9 percent to $35.17 while Denbury Resources Inc. (NYSE: DNR) fell 2.9 percent to $16.04.