US STOCKS-Wall St tumbles on recovery woes; S&P sheds Oct gain

* New home sales data heightens recovery worry

* Financial, tech, materials sectors fall hard

* Dow off 1.2 pct; S&P 500 off 2 pct; Nasdaq off 2.7 pct

* For up-to-the-minute market news, click [STXNEWS/US] (Adds more context on S&P 500's drop, volume)

By Ellis Mnyandu

NEW YORK, Oct 28 (Reuters) - U.S. stocks tumbled in a broad sell-off on Wednesday, sending the benchmark S&P 500 lower for a fourth straight day, after weak data on new home sales heightened concerns about the pace of the economic recovery.

Financials, technology, materials and industrial sectors, which underpinned the market's advance from March, bore the brunt of the slide as investors reassessed their bets.

"The housing data definitely created an additional leg down in the market," said Mike O'Rourke, chief market strategist at institutional brokerage firm BTIG in New York. "A lot of people realize that we're correcting right now and are being cautious."

The Nasdaq also logged its fourth straight daily drop. Wednesday's sell-off marked the broader market's worst day of losses in nearly a month.

The S&P 500 is now up 54.1 percent from the 12-year closing low of March 9. At Wednesday's close, it showed a drop of 5.04 percent from its post-March closing peak reached a week ago on Oct. 19.

The Dow Jones industrial average .DJI dropped 119.48 points, or 1.21 percent, to 9,762.69 -- its third triple-digit drop in four days. The Standard & Poor's 500 Index .SPX fell 20.78 points, or 1.95 percent, to 1,042.63. The Nasdaq Composite Index .IXIC slid 56.48 points, or 2.67 percent, to 2,059.61.

During the session, both the S&P 500 and the Nasdaq broke below key technical levels as the sell-off accelerated. Both indexes closed below their 50-day moving average for the first time since July, a bearish technical signal.

Additionally, the S&P 500 wiped out its gains for October and is now on the verge of snapping a string of seven months of gains.

The CBOE Volatility Index .VIX, Wall Street's favorite fear gauge, ended up 12.5 percent, its biggest one-day percentage gain since August.

Among financials, JPMorgan (JPM.N) shares fell 2.8 percent to $42.68, American Express Co (AXP.N) dropped 3.6 percent to $34.67, and the S&P financial index .GSPF shed 3.2 percent.