Bulls Take a Pounding

Treasury prices were higher following the data. The 10-year note rose 15/32 in price, yielding 4.49%, and the 30-year bond added 21/32 to yield 4.66%.

Meanwhile, worries about the subprime sector, and its potential effect on the economy, continued to filter through the market.

As lender New Century (NEWC Quote) struggled to stay afloat, one of its rivals is now facing its own problems. Accredited Home Lenders (LEND Quote) said it's exploring various options because its cash has been consumed by margin calls and forced loan repurchases. Shares of Accredited Home Lenders tanked, falling 65.2% to $3.97.

In addition, New Century said it has received a grand jury subpoena from the U.S. attorney's office and that the Securities and Exchange Commission is starting a probe into the company. Trading in shares of New Century was halted at $3.21 on the New York Stock Exchange at Monday's opening bell and was subsequently suspended by the exchange. The stock now trades on the Pink Sheets, and finished Tuesday's session at 84 cents.

Also playing a role this week is the simultaneous expiration of four different derivatives. Stock index futures, stock index options, stock options and single stock futures all will be trading for the last time on Friday. The expiration of all four contracts, referred to as quadruple witching, happens quarterly.

In the tech space, Texas Instruments (TXN Quote) tightened its outlook for the current quarter after Monday's close, saying sales should be $3.07 billion to $3.22 billion, with a profit of 29 cents to 33 cents a share.