U.S. stocks dropped to a six-week low Thursday on renewed concern about the credit markets after U.S. home foreclosures rose to a record, increasing market worries about the sagging economy.
The Dow Jones industrials fell more than 120 points after two reports were issued about the housing industry. In midmorning trading, the Dow fell 122.93, or 1.00 percent, to 12,132.06 at 11:30 a.m. in New York. The Standard & Poor's 500 Index slid 14.94 points, or 1.1 percent, to 1,318.76 and the Nasdaq Composite Index decreased 13.77, or 0.6 percent, to 2,259.04.
The Mortgage Bankers Association reported that home foreclosures hit an all-time high in the fourth quarter, while the National Association of Realtors said pending home sales were again sluggish last month.
Thornburg Mortgage Inc , a large mortgage lender, said it had received a letter from JPMorgan Chase notifying it of a default after it failed to meet a margin call of about $28 million. Thornburg's shares fell more than 50 percent.
Meanwhile, Carlyle Capital Corp. Also said it missed margin calls along with Thornburg. Both companies have significant mortgage-backed securities holdings, which has collapsed since the subprime crisis began during the summer.