Tough day on Wall Street

NEW YORK (CNNMoney.com) -- Worries about a prolonged housing slump and a new round of credit market jitters sent stocks tumbling Tuesday, with the Dow losing about 226 points.

Disappointing earnings news from several blue chips contributed to the selloff.

Quick Vote

What do you expect after Tuesday's stock selloff?

• More big declines
• Sideways for a while
• Right back up
• Too early to say

or View results

The drop in the 30-share Dow Jones industrial average (down 222.97 to 13,720.45, Charts) was equal to about 1.6 percent, marking its third biggest point loss so far this year.

Just a day earlier, the 30-stock index finished nearly 100 points higher.

The broader S&P 500 (Charts) lost nearly 2 percent. The tech-fueled Nasdaq (Charts) sank about 1.9 percent, while the Russell 2000 (down 24.35 to 811.27, Charts) small cap index plunged 2.8 percent.

Stocks retreated earlier in the session following some disappointing results from tech bellwether Texas Instruments (down $1.83 to $36.35, Charts, Fortune 500) and Dow components including chemical maker DuPont (Charts, Fortune 500) and credit card issuer American Express (down $3.48 to $61.18, Charts, Fortune 500).

The selloff accelerated after Countrywide Financial, the nation's largest mortgage lender, reported a sharp decline in quarterly profits and slashed its full-year earnings outlook. Countrywide (down $3.90 to $30.16, Charts, Fortune 500) shares finished over 10 percent lower.

The results, combined with a dismal outlook issued by the company's chief executive about the state of the housing market, renewed recent Wall Street fears about both the housing and mortgage sector.

"I think it's combination of all of the above," said Paul Mendelsohn, chief investment strategist with Windham Financial, speaking on the market selloff. "Countrywide is clearly an issue in terms of their report this morning, but there is a lot going on across a lot of markets."

Famed bond fund manager Bill Gross added to credit market worries Tuesday after he warned that the recent woes in the subprime mortgage market were spilling over to junk bonds and said that credit markets are facing a "sudden liquidity crisis."

Telecom giant AT&T (Charts, Fortune 500) reported results that beat forecasts, while fellow Dow component and fast-food leader McDonald's (Charts, Fortune 500) met expectations.

Online retailer Amazon.com (Charts, Fortune 500) reported results that topped Wall Street projections, sending its shares over 13 percent higher in after hours trade.

Results for beverage maker Pepsi Co. (Charts, Fortune 500) trounced Wall Street's estimates, helped partly by strength in its snacks business, while the company raised its full-year estimates.

The pace of earnings does not look like it will slow anytime soon however for Wall Street. Investors will have to sift through results from Boeing (Charts, Fortune 500), oil giant ConocoPhillips (Charts, Fortune 500) and Anheuser-Busch (Charts, Fortune 500) on Wednesday.

In corporate news, Apple (down $8.88 to $134.82, Charts, Fortune 500) stock fell over 6 percent - just a day before it reports quarterly results - after AT&T said in its quarterly earnings report that it activated far fewer iPhones during the first two days the device was available than analysts had anticipated.

And a report in the Wall Street Journal revealed that General Motors' (Charts, Fortune 500) Allison unit is having trouble selling debt to pay for its leveraged buyout by private equity firms.

In a session with no major economic reports, Wall Street will have a handful of readings to look forward to Wednesday, including existing home sales for June, the weekly oil inventory report and the Federal Reserve's "Beige Book" report on regional economic conditions.

Oil prices tumbled, with U.S. light crude down $1.33 to $73.56 a barrel on the New York Mercantile Exchange.

Treasury prices climbed as investors sought safe places for their money, lowering the yield on the 10-year note to 4.91 percent from 4.95 percent late Monday. Bond prices and yields move in opposite directions.

The dollar fell against the euro and the yen.

Market breadth was negative on higher than average volume. Decliners beat advancers nearly 10 to 1 on the New York Stock Exchange on volume of 1.98 billion shares. Losers beat winners on the Nasdaq 5 to 1 on volume of 2.51 billion shares.