Dow falls 226 on mortgage fears

NEW YORK — 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 chemical maker 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.

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 percent,closing at 2,639.86.

Declining issues outnumbered advancers by nearly 10 to 1 on the New York Stock Exchange, where consolidated volume came to a heavy 4.06 billion shares, compared with 3.09 billion shares on Monday.

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.

The stock market will likely be driven again 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.

Tuesday’s decline kept up a pattern of back-and-forth finishes. For the sixth straight session, the market has risen one day and fallen 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 don’t 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.”

A steady flow of lackluster earnings reports dictated the glum mood on Wall Street Tuesday.

DuPont and American Express both sank after their earnings reports. DuPont tumbled $3.36, or 6.3 percent, to $49.90, while American Express dropped $3.49, or 5.4 percent, 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 percent 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 percent, to $134.89. Apple is scheduled to report quarterly results on Wednesday.

Investors received some positive earnings news after the market close: Amazon.com Inc. said second-quarter profit more than tripled on robust online sales of books, music and electronics. The stock ended the regular session down $2.49, or 3.5 percent, at $69.25, then jumped in after-hours electronic trading.

Meanwhile, oil prices receded further from last week’s 11-month highs. Light, sweet crude gave up $1.33 to end at $73.56 on the Nymex. Gasoline futures fell.

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

Overseas, Japan’s Nikkei stock average fell 0.21 percent. Britain’s FTSE 100 dropped 1.90 percent, Germany’s DAX index fell 1.73 percent, and France’s CAC-40 fell 1.69 percent.