Stocks end lower after disappointing housing data sapped early market strength. The tech-concentrated Nasdaq closes down 1%, as does the S&P 500. The DJIA ends with a slimmer 0.5% decline. Oil hit a two-month low at $65.89 a barrel, also dragging on stocks.

August existing home sales declined 2.7%, compared with a 7.2% rise in July and expectations for a fifth straight monthly increase. On average, economists polled by Thomson Reuters expect an increase of 2.1% to an annual rate of 5.35 million.

The shocking home sales report erased early gains made on a drop in weekly jobless claims that put the number of applicants at the lowest since July. Claims fell 21,000 to 530,000 in the latest week. Continuing claims fell 123,000 to 6.14 million a week earlier.

Home-builder shares were broadly lower after the National Association of Realtors reported the unexpected drop in U.S. existing home sales in August.

In active company news, Red Hat (RHT) gained after the company topped Q2 estimates late Wednesday. National Semiconductor (NSM) erased early gains made after Citigroup reportedly raised its rating on the stock to buy from hold. Leading Brands (LBIX) jumps after reporting late Wednesday a profit in Q2, up from a loss a year ago.

GenVec (GNVC) is up on news it received a fourth year of funding for a HIV vaccine contract.

Meritage Homes (MTH) rises on an upgrade to conviction buy at Goldman Sachs. Goldman raised its rating on the entire homebuilders sector to attractive, too.

OraSure (OSUR) rallied on a deal with Premier Purchasing Partners for its HIV-1/2 antibody test.

On the downside, Nomura (NMR) declined on plans to sell $5.65 billion in stock.

Chelsea Therapeutics (CHTP) tumbled after one of its drug fails to meet a primary endpoint in a study.

Electronic Arts (ERTS) gave back some of Wednesday's gains after Microsoft (MSFT) debunked a rumor it was interested in buying ERTS.