U.S. stocks fell on Wednesday as more weak housing data reinforced fears about the economy, while banks weakened in late trading after the government launched tests to gauge their ability to withstand a long and deep recession.

* Sales of previously owned U.S. homes plunged much more than expected January, pulling homebuilders down 2.1 percent.

* After a choppy session that saw indexes swing both up and down, the Dow Jones industrial average <.DJI> fell 80.05 points, or 1.09 percent, to 7,270.89. The Standard & Poor's 500 Index <.SPX> lost 8.25 points, or 1.07 percent, to 764.89. The Nasdaq Composite Index <.IXIC> was down 16.40 points, or 1.14 percent, at 1,425.43.

(Reporting by Leah Schnurr)