Stocks fall on disappointing forecasts from Home Depot, Sears, D.R. Horton

NEW YORK — Stocks plunged Tuesday as investors, nervous about upcoming earnings reports, cringed at troubling forecasts from retailers Home Depot and Sears and at soaring oil prices. The Dow Jones industrial average fell more than 100 points.

The market seemed to be following the pattern of previous earnings seasons, turning lower as second-quarter reports had a rocky start. Home Depot Inc., Sears Holdings Corp. and homebuilder D.R. Horton Inc. offered dreary outlooks that suggested the sluggish housing market may dampen consumer spending.

The outlooks followed Monday's news that aluminum producer Alcoa Inc.'s second-quarter sales missed estimates and that printer manufacturer Lexmark International Inc. slashed its second-quarter earnings forecast. Together, the reports dispirited investors who had been counting on corporate America's performance giving a boost to the stock market, which has been stuttering in recent weeks.

"People are a little bit skittish about the health of the consumer," said Jack Caffrey, equities strategist at J.P. Morgan Private Bank.

As the U.S. dollar tumbled and investors fled to the relative safety of Treasury bonds, the stock market dropped further after oil prices briefly spiked above $73 a barrel, raising concerns about Americans' energy bills.

Wall Street — which often trades erratically amid profit warnings before the quarterly earnings flood — also weakened due to ratings agency Standard & Poor's, which said it may lower the credit rating of more than $12 billion in bonds backed by risky home loans. Such loans are sold by some of the nation's largest banks.

According to preliminary calculations, the Dow fell 148.27, or 1.09 percent, to 13,501.70, near its low of the session.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 21.73, or 1.42 percent, to 1,510.12, while the Nasdaq composite index was off 30.86, or 1.16 percent, at 2,639.16.

Bond prices soared, pushing down the 10-year Treasury note's yield to 5.03 percent from 5.16 percent late Monday. The plunge in yields failed to boost stocks, largely because the decrease was caused by worries about the housing market rather than confidence that inflation is easing.