Stock sell-off accelerates

Major gauges fall for second session as investors eye drop in confidence index, weak housing report, more signs of mortgage and credit market turmoil.

NEW YORK ( -- Stocks slumped Tuesday morning, building on the previous day's decline, as investors mulled a dour housing market report, a drop in consumer confidence and further signs of turmoil in the mortgage and credit markets.

The Dow Jones industrial average (down 102.67 to 13,219.46, Charts) lost 0.9 percent nearly two hours into the session, while the broader S&P 500 (down 16.05 to 1,450.74, Charts) index lost 1.2 percent. The tech-fueled Nasdaq Composite (down 30.62 to 2,530.63, Charts) lost 1.3 percent.

Stocks fell Monday on a weak July existing home sales report. Tuesday brought more evidence of erosion in the sector after a Standard & Poor's report showed that home prices fell 3.2 percent in the second quarter versus a year ago.

Investors also reacted to the 10:00 a.m. ET release of the August consumer confidence report

The August index fell to 105.0 from a downwardly revised 111.9 in the previous month. Economists surveyed by thought it would fall to 104.5 in the month.

Also weighing on stocks Tuesday: more problems for the financial sector amid the credit market turmoil.

State Street (down $1.68 to $62.20, Charts, Fortune 500) fell 5 percent on reports that the money manager has exposure to $22 billion of asset-backed commercial paper conduits, the kind of assets that have hurt European rivals recently, according to a report published in British paper The Times.

European bank Barclays (down $1.47 to $47.47, Charts) also slipped on reports that it may have exposure to several hundred millions of dollars of failed debt, reported. However, Barclays has denied this.

In addition, Merrill Lynch reportedly downgraded Citigroup (down $0.95 to $46.84, Charts, Fortune 500), Lehman Brothers (down $2.54 to $55.16, Charts, Fortune 500) and Bear Stearns (down $2.52 to $109.68, Charts, Fortune 500), according to

At around 2:00 p.m. ET, the minutes from the last Federal Reserve policy meeting on August 7 will be released.

Although the minutes are always of interest to investors, they are particularly dated this time, as the Fed has made substantial moves since the time of the minutes - including cutting the discount rate last week.

The discount rate affects bank loans. Investors are now hoping that the central bank will also cut the fed funds rate - which impacts consumer loans - at its next policy meeting in September.

Treasury prices rose, lowering the yield on the 10-year note to 4.55 percent from 4.57 percent late Monday. Bond prices and yields move in opposite directions.

In currency trading, the dollar gained versus the euro and eased against the yen.

U.S. light crude oil for October delivery fell 72 cents to $71.25 a barrel on the New York Mercantile Exchange. Top of page