Wall Street declines

Wall Street pulled back sharply today as investors dealt with disappointing earnings reports and renewed concerns about the mortgage lending market.

Wall Street pulled back sharply today as investors dealt with disappointing earnings reports and renewed concerns about the mortgage lending market.

The Dow Jones industrials fell more than 200 points.

DuPont Co. was the Dow's biggest loser after the chemical maker reported its second-quarter profit growth was flat, as improving sales abroad balanced the ongoing weakness in the US housing and automotive markets.

Fellow Dow component American Express Co. said late on Monday its quarterly profit climbed 12% on record card member spending.

However, the nation's third-largest credit card brand said cardholders are also shirking more payments.

Today's retreat was not surprising considering that the market's move into record territory came before profit reports were released in earnest.

Many investors bet that reports would be more upbeat than they have turned out to be. In addition, a profit warning from mortgage lender Countrywide Financial Corp. reminded investors that troubles in the subprime market persist.

The Dow gave up 226.47, or 1.62%, to 13,716.95. The drop was the average's biggest since March 13, when the Dow tumbled 242 points, also amid concerns that the subprime woes could infect the broader lending landscape.

Other major stock indicators also suffered steep declines. The Standard & Poor's 500 index shed 30.53, or 1.98 percent, to 1,511.04. The Nasdaq composite index lost 50.72, or 1.89%, closing at 2,639.86.

Declining issues outnumbered advancers by nearly 10 to one on the New York Stock Exchange, where volume came to almost two billion shares, compared with 1.52 billion on Monday.

Following the Dow's move last week in excess of 14,000 for the first time, it "seems logically like the market needs to have some profit-taking", said Joe Ranieri, managing director of US equity trading at Canaccord Adams.

The stock market will likely be driven by company earnings reports over the next two weeks, he said, as investors try to get a sense of how well corporate profits will hold up in the second half of the year.

The steady flow of earnings reports dictated Wall Street's direction on Tuesday, after five back-and-forth sessions that saw markets rise one day only to fall the next.

The shifts may have seemed sharp at times. But Todd Leone, managing director of equity trading at Cowen & Co. noted that, as a percentage of the whole, 100-point swings in the Dow do not register the way they used to, when the index traded at less than 10,000.

"I think we're in a range here," he said. "The market doesn't know what it's looking for."

DuPont and American Express both sank after their earnings reports. DuPont tumbled $3.36, or 6.3%, to $49.90, while American Express dropped $3.49, or 5.4%, to $61.17.

McDonald's Corp., the world's largest restaurant chain, posted a loss after taking a charge for the sale of its Latin American outlets. Excluding that charge, it reported earnings per share that matched Wall Street expectations. The Dow stock fell 95 cents to $51.55.

Dow component AT&T reported a 61% increase in second-quarter earnings, lifted primarily by its buyout of BellSouth Corp

At the same time, the telecommunications company reported fewer activations of Apple Inc.'s iPhone than analysts expected when the much-touted device debuted just before the quarter's end.

AT&T shares fell 35 cents to $39.68, while Apple's stock dropped $8.81, or 6.1%, to $134.89. Apple is scheduled to report quarterly results on Wednesday.

In what is perhaps a signal to Wall Street of more woes to come in the mortgage lending market, Countrywide Financial posted sharply lower second-quarter profit and slashed its earnings forecast as mortgage banking earnings were cut in half. Its shares declined $3.56, or 10.5%, to $30.50.

The largest US mortgage lender is used as one of the barometers of the housing industry, which has continued to slump amid delinquencies and defaults in subprime loans, or those made to borrowers with weak credit.

The troubles among subprime mortgage lenders have periodically rattled Wall Street this year, leading to sudden plunges as investors feared that the sector's problems would spread to other parts of the economy.

The market has generally recovered in a short period of time, but as today's trading showed, it remains vulnerable to any bad news about mortgages or housing.

In other corporate news, Texas Instruments Inc. said late yesterday that profit fell from a year ago which was boosted by one-time gains. The largest supplier of chips used in mobile phones saw its shares lose $1.72, or 4.5%, to $36.46.

The Russell 2000 index of smaller companies dipped 23.76, or 2.84%, to 811.86.

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