Wall Street pulled back sharply Tuesday as investors dealt with disappointing earnings reports and rising concerns about the mortgage market. The Dow Jones industrials fell more than 200 points.
DuPont Co. was the Dow's biggest loser after the chemicalmaker reported flat second-quarter profit, as improving sales abroad balanced the ongoing weakness in the U.S. housing and automotive markets. Fellow Dow component American Express Co. said late Monday its quarterly profit climbed 12 percent on record card member spending. However, the nation's third-largest credit card brand said cardholders are also shirking more payments.
Tuesday's retreat was not surprising, given that the market's recent move into record territory above 14,000 came before companies began reporting quarterly results in earnest. Many investors bet that results would be better than has been the case. A profit warning from mortgage lender Countrywide Financial Corp. Tuesday also reminded investors that troubles in the subprime market persist.
The Dow gave up 226.47, or 1.62 percent, closing at 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 industry.
Twenty-nine of the 30 Dow components fell; only Verizon Communications Inc. notched a modest gain.
Following the Dow's move last week over 14,000 for the first time, it "seems logically like the market needs to have some profit-taking," said Joe Ranieri, managing director of U.S. equity trading at Canaccord Adams.