Stocks get smacked

NEW YORK (CNNMoney.com) -- Stocks tumbled Tuesday on concerns about corporate earnings and the subprime mortgage sector while remarks by Federal Reserve Chairman Ben Bernanke failed to sooth investors.

The Dow Jones industrial average (down 130.47 to 13,519.50, Charts) sank about 1.1 percent, according to early tallies after falling as much as 153 points earlier in the session. The broader S&P 500 (down 21.02 to 1,510.83, Charts) lost 1.4 percent while the tech-fueled Nasdaq (down 30.72 to 2,639.30, Charts) slipped 1.1 percent.

Oil prices rose as U.S. light crude for August climbed 62 cents to $72.81 a barrel.

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

The nervousness about stocks sent some investors seeking the safety of government bonds and Treasury prices jumped, lowering the yield on the 10-year note to 5.03 percent from 5.15 percent late Monday. Bond prices and yields move in opposite directions.

Here's what was moving near the close:

Investors appeared to largely overlook a speech on inflation by Fed Chairman 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 $17.25 to $154.16, 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 $0.37 to $19.42, Charts, Fortune 500) shares slipped nearly 3 percent in afternoon trade.

Home improvement retailer Home Depot (up $0.08 to $40.31, 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 $1.23 to $47.56, Charts, Fortune 500), Goldman Sachs (down $5.64 to $217.66, Charts, Fortune 500) and Bear Stearns (down $5.65 to $138.24, 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 $0.62 to $5.96, 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 $1.02 to $85.93, Charts) Tuesday, just after posting a dip in quarterly profit that met forecasts after the market close Monday.

Shares of General Motors (up $0.69 to $37.46, 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 $0.02 to $9.10, Charts, Fortune 500)

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.

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

Market breadth was negative. Losers topped winners by more than 3 to 1 on the New York Stock Exchange as 1.51 billion shares changed hands. On the Nasdaq, decliners beat advancers by nearly the same ratio on volume of 2.1 billion shares.