Stocks Take Another Drubbing

Updated from 4:24 p.m. EDT

Stocks in the U.S. slid Tuesday, closing near their worst levels of the session, as disappointing comments from two retail giants and ominous news from a Midwestern fund manager put investors back on edge.

The Dow Jones Industrial Average tumbled 207.61 points, or 1.57%, to 13,028.92. The index was pulled down by a 5.1% decline in Wal-Mart(WMT - Cramer's Take - Stockpickr), which cut its outlook for the full year amid soft consumer spending, and a 4.9% loss in Home Depot(HD - Cramer's Take - Stockpickr).

Wal-Mart said that excluding items, it had second-quarter earnings of 76 cents a share, matching the Thomson First Call estimate, but the world's biggest retailer guided lower for the third quarter and full year.

Consumers, it said, have been hurt by "economic pressure," raising concerns that the housing market and credit strife are being felt by shoppers. Wal-Mart fell $2.35 to $43.82.

Meanwhile, Home Depot also warned of ongoing troubles in the housing market, though it backed its full-year outlook. For the second quarter, Home Depot had a profit of $1.59 billion, or 81 cents a share, down 15% from a year ago. On an adjusted basis, the home improvement retailer beat estimates by a nickel.

The stock dropped $1.72 to $33.52.

As for the other major averages, the S&P 500 fell 26.38 points, or 1.82%, to 1426.54. The Nasdaq Composite shed 43.12 points, or 1.7%, to 2499.12.