Credit woes whack Wall Street

NEW YORK (CNNMoney.com) -- The Dow industrials tumbled about 300 points Thursday, one of its biggest losses so far this year, as investors worried that problems in the housing and credit markets would dent the broader economy.

"It's the number one catalyst," said Ron Kiddoo, chief investment officer at Cozad Asset Management, regarding growing worries on Wall Street about a tightening of credit.

A glimpse of the Dow Jones industrial average after the 30-stock index plunged over 400 points Thursday afternoon amid fears about credit and housing markets.

The Dow Jones industrial average (down 403.03 to 13,382.04, Charts) sank as much as 449 points but pared some losses and was down about 300 points, or 2.2 percent, at the closing bell. The broader S&P 500 (down 31.87 to 1,486.22, Charts) plunged 2.4 percent while the tech-laden Nasdaq (down 75.01 to 2,573.16, Charts) fell nearly 2.1 percent. The Dow's loss is the second-biggest for the blue-chip average this year.

Trading curbs, used to slow down the market in the event of a big move, were imposed by the New York Stock Exchange late this morning. Treasury bonds surged as investors sought safety, oil turned lower and gold slid.

Credit market fears, which prompted a selloff that dragged the Dow down 226 points Tuesday, again unnerved investors and put pressure on stocks.

Higher oil prices also weighed on stocks early in the session as crude briefly climbed above $77 a barrel before turning lower. U.S. light crude for September delivery slid 86 cents to $75.02 a barrel in afternoon trading.

"People will be talking $80 a barrel crude soon - I think energy is the second largest concern [today]," said Kiddoo.

More disappointing news from the housing sector also weighed on investors. Homebuilders including D.R. Horton (down $0.76 to $16.72, Charts, Fortune 500) and Pulte Homes (down $1.11 to $19.56, Charts, Fortune 500), the nation's No. 2 and No. 3 builders, posted huge losses. And a bigger-than expected drop in new home sales in June added to those woes. The Commerce Department reported new home sales tumbled 6.6 percent.

The two big selloffs this week come just a week after the Dow hit another record, closing above 14,000 for the first time.

Peter Cardillo, chief market economist for Avalon Partners, said Thursday's steep selloff was probably a blip in the latest leg of the bull market.

"I don't see it as an end to the bull market, but maybe the end of the bull run," he said. "I think that the market needs to reassess some of the euphoria that took place recently."

Overall, the earnings news investors considered Thursday was mixed.

Dow component Exxon Mobil (down $4.94 to $87.85, Charts, Fortune 500), the nation's largest oil company, posted a decline in quarterly profits, sending its shares 5.5 percent lower.

But embattled automaker Ford Motor (up $0.19 to $8.16, Charts, Fortune 500) surprised investors reporting an unexpected quarterly profit early Thursday, helped by reduced losses in its North American operations. Ford stock climbed nearly 2 percent in late afternoon trade.

Apple (up $5.31 to $142.57, Charts, Fortune 500) shares jumped over 5 percent after the company reported results that beat Wall Street's estimates after the market closed Wednesday.

Dow component 3M Co., (down $0.12 to $89.50, Charts, Fortune 500) known for producing Scotch tape, reported earnings that topped Wall Street estimates. The stock edged higher.

Among individual issues, 29 of the 30 Dow components were lower in afternoon trade.

In other economic news, orders for big-ticket items meant to last three years or more rose less than expected in June.

Jobless claims fell unexpectedly last week, the government reported.

Treasury prices surged, taking the yield on the 10-year note to 4.77 percent from 4.91 percent late Wednesday. Bond prices and yields move in opposite directions.

Market breadth was negative on significantly heavier than normal volume. Losers topped winners by more than 10 to 1 on the New York Stock Exchange on volume of 2.41 billion shares. Decliners beat advancers more than 6 to 1 on the Nasdaq on volume of 3.08 billion shares.

The dollar fell against the euro and the yen.

COMEX gold for December sank $11.40 to $675.10.