Stocks linger in the red

NEW YORK (CNNMoney.com) -- Stocks remained in negative territory Tuesday as investors digested a jump in wholesale prices and a staggering sell-off in Thailand.

The Dow Jones industrial average (down 20.26 to 12,421.01, Charts) and the broader S&P 500 index (down 2.56 to 1,419.92, Charts) both bounced off their lows but were still down about 0.2 percent two hours into the session

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The tech-fueled Nasdaq composite (down 15.25 to 2,420.32, Charts) fell about 0.7 percent.

An inflation report released before the market open rattled investors in the early going. The Labor Department's Producer Price Index, a measure of prices paid by businesses, rose sharply in November, posting its biggest gain since 1974.

But those concerns eased somewhat as investors bet the jump wasn't indicative of an inflation comeback.

Treasury prices barely budged on the report - a sign that investors aren't that concerned about it, said Paul Nolte, director of investments at Hinsdale Associates.

More worrisome for investors was a sell-off in Asia that occurred after the Thai central bank placed limits on foreign investment in an effort to curb the rise of its currency, the baht.

Thai stocks plummeted 13 percent, while major markets in Japan and Hong Kong fell more than 1 percent as investors were reminded of the financial crisis that struck Asia a decade ago.

"The knee-jerk reaction when people hear 'currency crisis' is to sell everything," Nolte said.

But after witnessing the hammering stocks took following the move, Thai authorities said the restrictions wouldn't apply to equity investments.

Also on the economic front, homebuilding activity rebounded in November at a pace that exceeded Wall Street's expectations.

Builders started work on homes at an annual pace of 1.59 million in November, up from the 1.49 million rate in October, which had been the lowest reading since July 2000.

Circuit City (down $4.10 to $18.66, Charts) sank 18 percent after it posted a quarterly loss and said its holiday sales were hurt by fierce price competition from Wal-Mart. Analysts had expected the electronics retailer to report a profit.

Concerns about holiday sales spread to other retailers. Best Buy (down $1.37 to $47.97, Charts) lost 3 percent, and J.C. Penney (down $1.19 to $78.68, Charts) slipped 1 percent.

Among tech stocks, shares of software maker Oracle (down $0.75 to $17.16, Charts) tumbled 4 percent. The company reported earnings in line with Wall Street's estimates late Monday, but some investors had expected even better results.

Morgan Stanley (up $1.73 to $82.10, Charts) gained 3 percent after the company posted strong earnings and said it would spin off its Discovery credit card unit.

Homebuilder Hovnanian Enterprises (down $0.68 to $34.57, Charts) reported a loss for its latest quarter late Monday and issued a full-year outlook that fell sharply below forecasts. Shares of the builder fell 2 percent.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by a margin of 3 to 2 on volume of 593 million shares. On the Nasdaq, losers topped winners by a margin of nearly 9 to 5 as 791 million shares changed hands.

U.S. crude light crude oil for January delivery added 19 cents to $62.40 a barrel on the New York Mercantile Exchange.

Treasury prices held steady, keeping the yield on the benchmark 10-year note at the 4.58 percent level reached late Monday.

The dollar drifted lower against the euro and edged higher versus the yen.

In global trade, Asian markets finished the session lower, and major stock indexes in Europe fell in late afternoon trading.

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