Stocks get slammed again

NEW YORK (CNNMoney.com) -- Stock declines accelerated Tuesday afternoon, with investors bailing out amid ongoing worries about subprime mortgage lenders, a weak retail sales report and a further decline for the U.S. dollar.

The Dow Jones industrial average (down 165.35 to 12,153.27, Charts) lost over 200 points, or roughly 1.7 percent, with about 90 minutes left in the session. The broader S&P 500 (down 18.95 to 1,387.65, Charts) index lost 1.8 percent and the tech-heavy Nasdaq (down 36.23 to 2,366.06, Charts) composite lost 1.8 percent.

The Russell 2000 (down 15.73 to 773.27, Charts) small-cap index slumped 2.4 percent.

Stocks rallied Monday at the end of a choppy session in which worries about the subprime mortgage lenders vied with deals news.

Such worries were revived Tuesday after New Century Financial (Charts) said the Securities and Exchange Commission has subpoenaed documents in accounting probes. In addition, the New York Stock Exchange has suspended trading of the stock and is in the process of having it delisted.

New Century's problems sparked a further selloff in the rest of the sector.

Also in focus: a surprisingly weak read on retail sales and more nervous buying of the yen. After seesawing over the last week, the yen surged anew as investors continued to close out carry trades, or bets on riskier assets bought by borrowing in the currencies of countries with low interest rates, such as Japan.

The factors causing the selloff Tuesday were the same ones that caused the big selloff two weeks ago, said Barry Hyman, equity strategist at EKN Financial services. On that day, the Dow plunged 416 points, seeing its biggest one-day point drop since the day the market reopened after the Sept. 11 attacks.

"I think it's hard to put aside that big drop in the market and the reasons behind it," he said. "Again, selling is being driven by worries about the subprime contagion and the weak carry trade."

And the addition of the weak retail sales report - the latest in a string of discouraging economic data - has revived fears about the economy slowing too fast and possibly falling into a recession, Hyman said.

In addition to New Century's woes, fellow subprime Accredited Home Lenders (down $7.05 to $4.35, Charts) said Tuesday it has to raise new funds to avoid having to default on its loans. Shares slumped 60 percent in active trading.

Rivals Fremont General (down $0.33 to $6.40, Charts) and Novastar Financial (down $0.88 to $3.36, Charts) both slumped too.

Countrywide Financial (down $1.88 to $33.26, Charts), the largest U.S. mortgage lender, slipped for a second session after it said Monday that a jump in foreclosures and problems with subprime could weigh on earnings going forward.

Washington Mutual (down $2.15 to $39.75, Charts) slipped 5 percent in active trade on worries that its earnings will be negatively impacted by its exposure to the subprime market.

The subprime worries overshadowed strong earnings from Goldman Sachs (down $1.98 to $200.62, Charts). The financial leader reported earnings that rose from a year earlier and topped estimates. Shares slipped modestly.

Also a factor in the day's selling: February retail sales, which rose a smaller-than-expected 0.1 percent. Sales excluding autos fell 0.1 percent, versus forecast for a rise.

A separate report showed that January business inventories rose 0.2 percent, as expected.

In other news, Viacom (up $0.31 to $39.86, Charts) said it's suing Google (down $8.77 to $445.98, Charts) and its video sharing site YouTube for more than $1 billion regarding unauthorized use of its copyrighted programs.

Texas Instruments (down $0.94 to $31.65, Charts) slipped after the chipmaker issued its mid-quarter update late Monday, narrowing its forecast range for both revenue and earnings, but keeping the midpoint unchanged.

On the upside, Qualcomm (up $2.08 to $42.20, Charts) shares gained after the wireless chipmaker boosted its outlook for the second quarter.

Market breadth was negative and volume was moderate. On the New York Stock Exchange, losers beat winners by more than three to one on volume of 1.08 billion shares. On the Nasdaq, decliners topped winners by almost four to one on volume of 1.29 billion shares.

U.S. light crude oil for April delivery rose 30 cents to $59.45 a barrel on the New York Mercantile Exchange.

Treasury prices rose, lowering the yield on the 10-year note to 4.50 percent from 4.55 percent late Monday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and the yen.

COMEX gold for April delivery fell 10 cents to $650.20 an ounce.

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