An early rally on better than expected earnings reports from Sun Microsystemsand GMgave way to another steep sell-off Tuesday on news that American Home Mortgage Investmentis facing bankruptcy because of mortgage losses.
The news suggested that mortgage troubles are spreading outside the subprime market, giving investors yet another reason to fear growing credit market troubles.
Sun was a standout, gaining 4% on better than expected earnings.
But Alcatel Lucenttumbled 12% after posting a loss, and market leaders Appleand Amazonled the Nasdaq lower. Apple fell on concerns about iPhone demand.
Optium, Silicon Motionand Commscopefell on their quarterly results, while On Semigained on its earnings report.
Cambridge Displaysoared 89% on a buyout deal with Japan’s Sumitomo Chemical Co.
The Nasdaq lost 37 to 2546, the S&P 500 shed 18 to 1455, and the Dow tumbled 146 to 13,211. Volume rose to 4.36 billion shares on the NYSE, and 2.82 billion on the Nasdaq. Declining issues led by an 18-14 margin on the NYSE, and 18-12 on the Nasdaq. Downside volume was 78% on the NYSE, and 68% on the Nasdaq. New highs-new lows were 44-363 on the NYSE, and 89-296 on the Nasdaq.