Credit Fears Crush Wall Street

As for earnings, pet-supply store PetSmart (PETM Quote), reported a receding fourth-quarter profit and predicted its bottom line will probably drop in 2008, as well. Also disappointing was women's-apparel chain store Coldwater Creek (CWTR Quote), which said it swung to a fourth-quarter loss on dwindling sales, compared with a year-earlier profit.

Shares of PetSmart sank 11.7%, and Coldwater plummeted 19.8%.

Urban Outfitters (URBN Quote), however, topped expectations with surging earnings. Same-store sales spiked 11% from last year. Still, shares eased by 2.9%.

Elsewhere, tax preparer H&R Block (HRB Quote) tacked on 3.4% after reporting that its fiscal third-quarter loss had narrowed from a year earlier thanks to subsiding costs from subprime-lending unit Option One, as well as rising revenue.

On the data side, the Labor Department said weekly initial jobless claims totaled 351,000, about 9,000 fewer than forecast. The prior week was revised up by 2,000 to 375,000.

Separately, pending home sales for January were unchanged from the previous month, according to the National Association of Realtors, while the Mortgage Bankers Association said that mortgage foreclosures in the U.S. hit a record high at the end of last year.

In another noteworthy development, the Federal Reserve reported homeowners' equity sinking to 47.9% last quarter in relation to mortgage debt -- the lowest ratio since the central bank began recording those numbers in 1945, according to reports. The Fed also revised data from last year to reflect second-quarter home equity slipping under the 50% mark, also for the first time since the end of World War II.

As for commodities, crude oil closed above the $105 a barrel mark for the first time, ending up 95 cents to $105.47. Earlier, it reached an intraday high of $105.97. Gold futures, however, were off $11.40 to settle at $977.10 an ounce.

Tthe U.S. dollar once again slid to a new low against the euro, this time at $1.5388, to extend its freefall over the past few days.

Treasury prices were climbing. The 10-year note was up 26/32 in price to yield 3.59%. The 30-year bond gained 16/32 in price, yielding 4.57%.

Overseas markets were mixed. In Asia, Tokyo's Nikkei 225 jumped 1.9%, and Hong Kong's Hang Seng climbed 1%. European bourses, however, sank in tandem with the U.S. market. London's FTSE 100 lost 1.5%, and Germany's Xetra Dax was off 1.4%. Both the Bank of England and the European Central Bank maintained their benchmark lending rates.