Plenty of worry on Wall Street

NEW YORK (CNNMoney.com) -- Some troubling earnings news and renewed fears about the subprime mortgage sector sent stocks lower Tuesday afternoon, while investors weighed a speech on inflation by Federal Reserve Chairman Ben Bernanke.

The 30-stock Dow Jones industrial average (down 102.83 to 13,547.14, Charts) fell by as much as 123 points and was about 0.8 percent lower - with less than an hour remaining in the session. The broader S&P 500 (down 15.74 to 1,516.11, Charts) slipped 1.1 percent, while the tech-fueled Nasdaq (down 25.74 to 2,644.28, Charts) sank about 1 percent.

Investors appeared to largely overlook a speech on inflation by Federal Reserve Chairman Ben Bernanke, who said energy price spikes have not led to persistent inflation or a recession in recent years.

Delivering a speech to the National Bureau of Economic Research, the Fed chief said "changes in energy [and food] prices should have relatively little influence on 'core' inflation, that is, inflation excluding the prices of food and energy."

Stocks retreated earlier following a series of profit warnings at the start of the second quarter earnings season, which kicks off this week.

Retailer Sears Holdings (down $16.71 to $154.70, Charts, Fortune 500) said it expects lower profit for the quarter, sending shares of the retailer down more than 8 percent on the Nasdaq.

The nation's largest home builder, D.R. Horton, reported a 40 percent drop in new home orders last quarter and said it expected to post its first quarterly loss since 1995 in the third quarter. D.R. Horton (down $0.36 to $19.43, Charts, Fortune 500) shares slipped nearly 3 percent in afternoon trade.

Home improvement retailer Home Depot (up $0.10 to $40.33, Charts, Fortune 500) lowered its earnings outlook for the fiscal year early Tuesday, citing weaker conditions in the housing market. Shares of the Dow component edged higher on the New York Stock Exchange, despite the news.

After appearing to subside last week, the recent mess in the subprime mortgage sector re-emerged Tuesday after the credit rating agency Standard & Poor's said it may cut $12 billion of subprime-related debt, saying it expected more delinquent and defaulted U.S. home loans.

Shares of investment banks and other financial firms slipped on the news as shares of J.P. Morgan Chase (down $1.16 to $47.63, Charts, Fortune 500), Goldman Sachs (down $5.26 to $218.04, Charts, Fortune 500) and Bear Stearns (down $4.78 to $139.11, Charts, Fortune 500) all fell more than 2 percent in afternoon trade.

"I think it's definitely weighing on the market," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank.

In corporate news, Gemstar-TV Guide (up $0.66 to $6.00, Charts), which publishes TV Guide magazine and the cable channel, announced it had put itself up for sale, sending its shares up about 12 percent.

Aluminum giant Alcoa extended its outstanding offer to acquire Canadian rival Alcan (down $1.21 to $85.74, Charts) Tuesday, just after posting a dip in quarterly profit that met forecasts after the market close Monday.

Shares of General Motors (up $0.75 to $37.52, Charts, Fortune 500) led the handful of Dow gainers, climbing 2 percent after J.P. Morgan Securities upped its rating of the automaker and crosstown rival Ford Motor Co. (up $0.06 to $9.14, Charts, Fortune 500)

Oil prices rose as U.S. light crude for August climbed 71 cents to $72.90 a barrel.

In the only major economic news of the day, the Commerce Department reported that inventories of unsold goods rose more than expected during the month of May.

Overseas, the dollar fell to a record low against the euro and eased versus the yen amid continued pessimism about the dollar.

Treasury prices jumped, lowering the yield on the 10-year note to 5.05 percent from the 5.15 percent level reached late Monday.

COMEX gold for August delivery rose $1.90 to $664.40 an ounce.

Market breadth was negative. Losers topped winners 3 to 1 on the New York Stock Exchange as 1.12 billion shares changed hands. On the Nasdaq, decliners beat advancers more than 2 to 1 on volume of 1.65 billion shares.