Stocks turn negativeInvestors give up recovery attempts, as major gauges tumble on ongoing subprime mortgage woes.NEW YORK (CNNMoney.com) -- Stocks turned lower Wednesday afternoon, as investors gave up early attempts to recover from some of the previous session's battering and instead opted to refocus on the subprime mortgage market troubles. The Dow Jones industrial average (down 83.47 to 11,992.49, Charts) lost 0.7 percent 3 hours into the session, dipping below 12,000 for the first time since November 6 of last year. 
The broader S&P 500 (down 10.39 to 1,367.56, Charts) index and the Nasdaq (down 15.02 to 2,335.55, Charts) composite both lost 0.5 percent. All three major gauges tumbled about 2 percent Tuesday as worries about subprime lending and the economy sparked the second worst selloff of the year. Following such a decline, investors tried to recover Wednesday morning, with the major gauges seesawing on both sides of unchanged. But the recovery attempt faded by midday as the focus returned to worries about how badly problems with subprime loans - made to borrowers with weak credit - will hurt the already troubled housing market and by extension, the economy. Subprime lenders have seen a spike in defaults on loans. A few subprime stocks bounced back after Tuesday's selloff, including Accredited Home Lenders (up $0.46 to $4.43, Charts), which slumped 65 percent on Tuesday. But the broader concerns about the sector remained a drag on the market, particularly with more companies talking about the impact. Dow component GM swung to a profit that was nonetheless short of Wall Street estimates. The world's biggest automaker said that while its North American operations recovered, the problems with subprime mortgage lending hit its finance unit. GM (down $0.65 to $29.86, Charts) shares slipped about 2.5 percent. Lehman Brothers reported higher quarterly earnings that topped estimates as strength in equity markets tempered any fallout from subprime. But Lehman (down $2.63 to $69.37, Charts) shares slipped 5 percent nonetheless. A variety of airline, railroad and trucking stocks slumped, dragging down the Dow Jones Transportation (down 88.44 to 4,638.12, Charts) average by 2 percent. On the upside, Qualcomm (up $1.13 to $42.96, Charts) rose again one session after the wireless telecom provider boosted its second-quarter earnings and revenue outlook. On Wednesday, JP Morgan upgraded the stock, Briefing.com reported. Market breadth was negative. On the New York Stock Exchange, decliners topped advancers 3 to 2 on volume of 950 million shares. On the Nasdaq, losers beat winners two to one on volume of 1.05 billion shares. Investors also eyed a morning report that showed that the fourth-quarter current account deficit narrowed more than expected. U.S. light crude oil for April delivery fell 13 cents to $57.80 a barrel on the New York Stock Exchange, seesawing after a mixed weekly oil inventories report. COMEX gold for April delivery fell $6.10 to $643.30 an ounce. Treasury prices reversed course, turning higher, lowering the yield on the 10-year note to 4.48 percent from 4.49 percent late Tuesday. Treasury prices and yields move in opposite directions. In currency trading, the dollar slumped versus the euro and the yen, giving up early gains. |
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