Stocks head downward

NEW YORK (CNNMoney.com) -- Stocks retreated Wednesday morning as continued concerns about a credit crunch in the U.S. weighed on better-than-expected earnings news.

The Dow Jones industrial average (Charts) slipped 0.2 percent. The Nasdaq composite index (Charts) lost 0.7 percent. The Standard & Poor's 500 index (Charts) was down 0.5 percent.

U.S. stocks tumbled Tuesday after American Home Mortgage Investment Corp. (Charts) said that lenders had cut off its access to credit and that it may have to liquidate its assets. The mortgage provider also said it wouldn't be able to fund $450 million to $500 million of loans.

A third Bear Stearns (Charts, Fortune 500) hedge fund that is reportedly in jeopardy also added to jitters. The Wall Street Journal reported Tuesday night that a Bear Stearns fund with about $900 million in mortgage investments is refusing to return investors' money. Shares of the investment bank opened lower.

In other corporate news, Rupert Murdoch finally won his battle for the publisher of the Wall Street Journal. Dow Jones (Charts) agreed to be taken over by News Corp. (Charts) for $5.6 billion.

Time Warner (Charts), which owns CNNMoney.com, reported second-quarter earnings that topped analysts' estimates and said it has authorized an additional $5 billion stock repurchase.

On the economic front, the Institute for Supply Management's report on nationwide manufacturing activity is due at 10 a.m. ET, with economists forecasting that closely watched index slipped to 55.5 for July from 56 in June. But any reading above 50 is a sign of growth in that sector.

Also due at 10 a.m. is the National Association of Realtors' report on pending home sales, a more forward looking reading on existing home sales activity than its main home sales report. Economists are forecasting that index will continue to slide, falling 0.6 percent.

U.S. auto sales are also on tap, with sales tracker Edmunds.com forecasting an 8 percent drop in industrywide sales, with General Motors (Charts, Fortune 500) and Ford (Charts, Fortune 500) both expected to post far larger declines. This could be the first month on record that domestic brands fall below 50 percent of overall U.S. sales.

Treasury prices turned lower. The yield on the benchmark 10-year note rose to 4.75 percent from 4.74 percent late Tuesday. Bond prices and yields move in opposite directions.

Oil prices eased ahead of the the government's weekly report on crude inventories, due at 10:30 a.m. ET, after setting a record close Tuesday. U.S. light crude for September delivery lost 42 cents to $77.79 a barrel in electronic trading.

The dollar gained against the euro and was little changed versus the yen.

Overseas markets were hammered in earlier trading. Asian markets plunged and European stocks sank in early trading.