* Home buyer tax credit fears hurt financials, builders

* Commodity shares retreat amid U.S. dollar's bounce

* Dow off 1.1 pct; S&P off 1.2 pct; Nasdaq off 0.6 pct

* For up-to-the-minute market news, click [STXNEWS/US] (Recasts lead, adds Harry Reid news)

By Ellis Mnyandu

NEW YORK, Oct 26 (Reuters) - U.S. stocks fell for a second straight session on Monday as investors ditched home builders and financials on fears lawmakers may let a federal home buyer tax credit expire, while commodity shares succumbed to pressure from the higher U.S. dollar.

Trading was choppy. Stocks initially started on firmer footing, with indexes up more than 1 percent shortly after the open, but the bounce quickly faded as the U.S. dollar rebounded and investors fretted about the financial sector's prospects.

The tax credit has become a hot button issue and Wall Street sold off after an incorrect media headline said research firm, ISI Group, had written the tax credit probably would not be extended when it expires Nov. 30. For details, see [ID:nN26135701]