Stocks Take a Spill

Updated from 4:18 p.m. EST

Stocks fell Thursday despite an avalanche of better-than-expected sales reports from the nation's chain stores, as investors fretted about the subprime-lending market and the housing sector.

The Dow Jones Industrial Average lost 29.24 points, or 0.23%, to 12,637.63, and the S&P 500 was off 1.71 points, or 0.12%, at 1448.31. The Nasdaq Composite was down 1.83 points, or 0.07%, to 2488.67.

Roughly 2.66 billion shares changed hands on the New York Stock Exchange. Decliners beat advancers by a 6-to-5 margin. Volume on the Nasdaq topped 2.01 billion shares, with losers outpacing winners 8 to 7.

"The last three or four days we had average volume with low volatility and managed to have slight gains," said Phillip Roth, chief technical market analyst with Miller Tabak. "Today we saw the same thing but we edged lower. The market is stalling, but as long as we don't have an accelerated selloff we should remain in an upward trend."

Homebuilders were the worst performers of the session following a weak revenue forecast from Toll Brothers (TOL Quote). The Philadelphia Housing Sector index fell 2.1%.

Champion Enterprises (CHB Quote) lost 5.5%, Hovnanian (HOV Quote) finished down 4.3%, Ryland Group (RYL Quote) was off 3.5%, and Meritage Homes (MTH Quote) slumped 2.7%.

Meanwhile, publicly traded lenders dropped. HSBC (HBC Quote) said it would have to spend 20% more than originally thought this quarter to cover loans that went bad, sending its shares lower by 2.7% to close at $89.78.