Plane crash alarm leaves stocks shaky

The crash of a passenger plane flying over Ukraine rattled U.S. financial markets Thursday, deepening a slide set off by a batch of disappointing company earnings and a weak home-construction report.

All three major stock indexes ended lower for the first time in a week, but remained near record highs and positive for the year. The Dow Jones industrial average slid 161.39 points, or 0.9 percent, to close at 16,976.81. The Standard & Poor's 500 index fell 23.45 points, or 1.2 percent, to 1,958.12. The Nasdaq composite sank 62.52 points, or 1.4 percent, to 4,363.45.

A Malaysia Airlines passenger plane carrying 295 people crashed over violence-torn eastern Ukraine, although both the government and pro-Russia separatists fighting in the region denied responsibility. The situation raised concerns of wider geopolitical instability and an escalation of tensions between Russia and the West.

Investors responded by seeking refuge in U.S. government bonds. The yield on the 10-year Treasury note fell to its lowest level since May. Gold and oil prices rose.

SanDisk, AutoNation, Yum Brands, and Mattel were among stocks posting the biggest declines after reporting earnings or profit forecasts that disappointed investors. Airline and home-builder stocks also fell sharply.

"What happened with the plane today, and things swirling around with what may have actually happened with the plane, caused a bit of a sell-off," said Joe "JJ" Kinahan, chief strategist at TD Ameritrade. "The geopolitical risk is always the first one that people look for because it's the one that changes the fastest. The market always hates uncertainty."

Stock futures were down before the market opened as investors pored over the latest earnings and other news.

A pair of government reports pointed to an uneven U.S. recovery. The number of people seeking unemployment benefits fell last week, but home construction dropped in June to the slowest pace in nine months, clouding the outlook for the housing recovery.

Home builders slumped on the news. M/I Homes led the decline, tumbling $1.38, or 5.8 percent, to $22.37.

"The housing-starts numbers were weak, but housing has been incredibly volatile," said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research. "They were definitely disappointing."

The CBOE Volatility Index, known as the "VIX," jumped 33 percent, reflecting investors' uneasiness.