U.S. stocks fell on Thursday as financial leaders such as American International Group and Merrill Lynch declined, fueling concerns that credit market losses will continue to hit financial shares.

The day was dominated by earnings reports, with financial stocks falling on credit market woes and technology stocks faring better. Economic sentiment received a slight boost on higher than expected home sales in September.

The Dow Jones industrial average fell 3.33 points, or 0.02 percent to finish at 13,671.92. The Standard & Poor's 500 Index dropped 1.48 points, or 0.10 percent, to close at 1,514.40. The technology heavy Nasdaq Composite Index dipped 23.90 points, or 0.86 percent, at 2,750.86.

American International Group shares fell $2.05, or 3.2 percent, to $61.79 amid rumors that the world's biggest insurer will report big write-downs related to subprime mortgages and collateralized-debt-obligations. The concerns came a day after the largest U.S. brokerage, Merrill Lynch reported an $8.2 billion write down on the same financial products.

EMC corp, the biggest server software and storage company rose $1.99, or 8.83 percent, to $24.52 after beating estimates with a 74 percent rise in quarterly profit and announcing a stock-buyback plan of $2 billion.

A surprising positive came from the Commerce Department which said sales of new U.S. homes rose to an unexpected rate of 4.8 percent annual rate of 770,000, beating some forecasters' estimates.