Dow Jones keep falling on Fear

NEW YORK -- The stock selloff accelerated Tuesday afternoon on worries about a possible credit crunch and disappointing profit forecasts from Home Depot and Wal-Mart Stores, sending the Dow industrials tumbling 200 points.

The 30-share Dow (down 172.90 to 13,063.63, Charts) sank as much as 200 in afternoon trading, though it quickly rebounded and was off about 170 points, or 1.3 percent, with just over an hour left in the session. The broader S&P 500 (down 21.21 to 1,431.71, Charts) index slid 1.4 percent while the tech-fueled Nasdaq Composite (down 33.98 to 2,508.26, Charts) index sank 1.5 percent.

Stocks opened in mixed territory Tuesday with the Dow and the S&P 500 feeling the impact from retailers and the Nasdaq managing modest gains, thanks to a mild core inflation number in the morning's Producer Price Index (PPI).

However, by midmorning the tone had turned negative, with all three major gauges seeing declines.

In addition to retail sector woes, financial stocks were hit once again on worries about the credit crisis. Additionally, a second look at the PPI, which showed a bigger-than-expected jump on the overall reading may have raised concerns about Wednesday's more closely-watched Consumer Price index (CPI), said Fred Dickson, chief market strategist at D.A. Davidson & Co.

"Today, bad news is outweighing the good news," Dickson said. "PPI was hotter than expected, Wal-Mart's outlook countered Home Depot's better earnings and there are residual concerns relating to the mortgage market."

Stocks have been battered on and off over the last few months on concerns about tightening of credit after a period of great liquidity. Investors have also been sorting through the impact of the slumping housing market, including the collapse of the subprime mortgage market - loans made to consumers with less than ideal credit.

Among the factors reviving some of this uneasiness Tuesday: media reports that Sentinel, a money market mutual fund firm for commodities, has asked regulators for permission to halt client withdrawals.

Additionally, Countrywide Financial (down $2.06 to $24.56, Charts, Fortune 500), the leading U.S. mortgage lender, slipped after the company said that foreclosures and delinquencies rose in July to their highest level in several years.