* New home sales fall for the 1st time since March
* Technology shares suffer sharp losses; Apollo off 18 pct
* Dow off 0.5 pct, S&P off 1.1 pct, Nasdaq off 1.8 pct
(Updates to midday)
By Angela Moon
NEW YORK, Oct 28 (Reuters) - The benchmark S&P 500 index fell for a fourth straight day on Wednesday after disappointing housing data and a lower forecast for third-quarter U.S. growth by Goldman Sachs.
Hardest hit of the major indexes was the Nasdaq, which was dragged down by big cap tech shares after a two-week period in which technology had outperformed the other sectors. Apple Inc was down 2 percent at $193.50 and Microsoft Corp fell 1.2 percent at $28.27.
Stocks were hurt by a government report showing an unexpected fall in new home sales last month, while Goldman Sachs cut its forecast for gross domestic product, saying stocks may have gone too far.
"We finally started to worry about the after-effects of market stimulus" as government stimulus ends, said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.
"You get a reality check that this (market) is just overstretched... we haven't had a correction of more than 3-4 percent in the past seven, eight months."
The Dow Jones industrial average was down 50.03 points, or 0.51 percent, at 9,832.14. The Standard & Poor's 500 Index was down 12.04 points, or 1.13 percent, at 1,051.37. The Nasdaq Composite Index was down 38.26 points, or 1.81 percent, at 2,077.83.
Until now, the S&P technology sector had lost the least ground since the market's closing high of 1,097.91 on Oct. 19, according to analysts at Bespoke Investment Group, but that sector was feeling the brunt of the losses on Wednesday. Apollo Group Inc shed more than 18 percent after it said federal regulators launched an informal inquiry into its revenue recognition practices.
The weak home sales data heightened concerns that housing demand will slip as the one-time home buyer tax credit is phased out.
Sales of newly built single-family homes fell 3.6 percent last month, their first drop since March, prompting investors to doubt the strength of recovery in consumer mood and the housing sector.
Goldman Sachs cut its forecast for third-quarter GDP to 2.7 percent from 3.0 percent, the investment bank said. Data on GDP -- a gauge of economic growth, which the government will release on Thursday -- is expected to show a rise of 3.3 percent, according to 77 analysts polled by Reuters.
The CBOE Volatility Index also moved above its 50-day average and outpaced the nearest month volatility futures contract as the S&P 500 index retreated.
Visa Inc jumped 3.5 percent to $76.44 a day after it posted a stronger-than-expected quarterly profit, raised its dividend and authorized a stock-buyback plan. (Editing by Kenneth Barry)