U.S. stocks fell on Wednesday, with the S&P 500 wiping out what was left of its 2007 gains, as credit jitters sparked a broad stock market sell-off.
Shares of Countrywide Financial Corp. fell 16.2 percent to $20.51 on the rumors that the largest U.S. mortgage company has been unable to raise money from the commercial paper market. Countrywide officials were not immediately available for comment.
Earlier, Merrill Lynch downgraded the No. 1 U.S. mortgage lender to sell, saying it could face bankruptcy if liquidity worsens.
The problem is now you shoot first and ask questions later. We've got nervous markets. We're just looking for the next problem, said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago.
The Dow Jones industrial average was down 111.61 points, or 0.86 percent, at 12,917.31. The Standard & Poor's 500 Index was down 11.15 points, or 0.78 percent, at 1,415.39. The Nasdaq Composite Index was down 18.83points, or 0.75 percent, at 2,480.29.
The benchmark S&P 500 index is now nearly 9 percent below its record close on July 16.
The Dow Jones home builder index was down 3.7 percent after the National Association of Home Builders said U.S. home builder sentiment slid in August to its lowest level since January 1991.