Credit Worries Wallop Stocks - TheStreet

Credit Worries Wallop Stocks

The Dow sinks more than 200 points, and the Nasdaq plunges 50.
Publish date:

Updated from 4:08 p.m. EDT

Stocks slid hard Tuesday as new worries about the credit arena and a profit shortfall at


(DD) - Get Report

overshadowed another round of mostly solid earnings reports elsewhere.


Dow Jones Industrial Average

lost 226.47 points, or 1.62%, to 13,716.95. The

S&P 500

fell 30.53 points, or 1.98%, to 1511.04, and the


plunged 50.72 points, or 1.89%, to 2639.86.

Traders were focusing on the negatives, including the fact that DuPont, a component of the Dow, missed second-quarter expectations. The chemicals concern kept its full-year forecast, but shares slid $3.36, or 6.3%, to end at $49.90.

A disappointment from

Texas Instruments

(TXN) - Get Report

, which reported after the previous close, hit tech stocks. The chipmaker said its second-quarter earnings were in line with consensus targets but down from a year ago, and its sales outlook was on the light side. TI fell $1.72, or 4.5%, to $36.46.

Weighing further on the market were renewed concerns about debt, which have popped up several times in recent months. After the previous close,

American Express

(AXP) - Get Report

topped analysts' profit estimates, but the financial services giant said it had to increase its loan-loss reserve because of a higher rate of delinquencies.

The Dow component's stock lost $3.49, or 5.4%, to close at $61.17.

Meanwhile, lender



missed by a wide margin, citing increased credit-related costs, and lowered its 2007 guidance, saying the second half will be challenging. It also said liquidity for mortgage securities has been reduced. Shares of Countrywide tumbled $3.56, or 10.5%, to $30.50.

"There's fear entering certain parts of the market, and we're seeing a risk adjustment taking place," said Paul Mendelsohn, chief investment strategist with Windham Financial. "This shift could be foreshadowing something bigger, as everyone could run for the door at the same time. Once markets start picking up momentum, they tend to keep moving because everyone's on the same side."

Virtually every sector finished with losses. Among the worst decliners, the Amex Oil Index dropped 3.5%, the Philadelphia Utility Index slumped 3.5%, the Nasdaq Financial Index fell 3%, and the KBW Bank Index lost 3%.


(AAPL) - Get Report

, which will post earnings late Wednesday, contributed to the tech sector's slide amid speculation the iPhone maker will miss sales targets for the new gadget. Shares tumbled 6.1% to $134.89.

Trading curbs were put into effect on the

New York Stock Exchange

for the first time since March 13, when subprime fears surrounding

New Century



Accredited Home Lenders

(LEND) - Get Report

first became a force and sank the major averages.

About 3.91 billion shares changed hands on the NYSE, as decliners toppled advancers by a 9-to-1 margin. Volume on the Nasdaq reached 2.46 billion shares, with losers outpacing advancers 5 to 1.

Another setback came from

General Motors

(GM) - Get Report

, which, according to a report in

The Wall Street Journal

, is having trouble raising debt for its Allison engine unit. The division is trying to raise funds to complete a leveraged buyout. GM shed 47 cents, or 1.3%, to $34.65.

However, it wasn't all bad, despite the pullback.


(T) - Get Report

was better than expected on the profit line, as were

Lockheed Martin

(LMT) - Get Report



(CME) - Get Report

. While AT&T and CME declined, Lockheed Martin shot higher by 3.6% to $103.09.

British oil major


(BP) - Get Report

said earnings rose 1.5%, and

Eli Lilly

(LLY) - Get Report

exceeded estimates and lifted its projections. BP dipped 2.9% to $72.30, while Eli Lilly finished the day unchanged at $57.17.


(PEP) - Get Report







were also better than expected, as were




Northrop Grumman

(NOC) - Get Report

. UAL was the only name in the group to finish with gains, ending higher by 4.2% for the session.

Dow stock


(MCD) - Get Report

posted only its second-ever quarterly loss. Excluding items, the restaurant chain matched the forecast for a profit of 71 cents a share. Shares slipped 95 cents, or 1.8%, to finish at $51.55.

On the research front, Citigroup upgraded


(WB) - Get Report

to buy from hold, citing valuation. Still, shares closed lower by 41 cents, or 0.8%, to $48.41.

Among downgrades, Jefferies cut both

United Rentals

(URI) - Get Report




to hold from buy. United Rentals was off by 56 cents, or 1.7%, to $32.42. GlobalSantaFe ended down 73 cents, or 0.9%, to $77.60.

On Monday, both stocks made M&A headlines and gave the major averages a boost.


(RIG) - Get Report

said it will combine with GlobalSantaFe to form a driller with an enterprise value of $53 billion.

Private-equity firm Cerberus said it will acquire United Rentals for $2.83 billion.

Away from stocks, the front-month September crude contract sank for a second session. Oil dropped $1.33 to $73.56 a barrel. Gasoline prices were lower by 5 cents at $2.05 a gallon.

"Because oil prices were down so much today, a lot of oil stocks were under pressure," said Mendelsohn. "There is no sector to pick up the slack today. Unless something causes the financial sector to bottom, I don't see any other sector big enough to pick up the slack and carry this market."

With the economic docket vacant, Treasury prices were little changed. The 10-year note tacked on 2/32 in price, yielding 4.95%, and the 30-year bond was flat, yielding 5.06%.

Overseas, stocks rose in Asia and declined in Europe. Tokyo's Nikkei added 0.2%, and Hong Kong's Hang Seng climbed 0.5%. London's FTSE shed 1.9%, and Frankfurt's DAX was off 1.7%.

Following Tuesday's close,

(AMZN) - Get Report

and homebuilder



will post quarterly results.

The earnings torrent will continue before the next open, when such names as


(BA) - Get Report



(COP) - Get Report



(GLW) - Get Report

, and



are due to report.