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US stocks fall on renewed jitters US stocks fall on renewed jitters
(about 5 hours later)
US stocks have fallen in early trading, with problems in the mortgage sector continuing to have an adverse effect on market sentiment. US shares are falling again, with problems in the mortgage sector continuing to have an adverse effect on market sentiment.
The Dow Jones was down 63 points to 13,173, as investors reacted to news that Wal-Mart and Home Depot had warned of tough times to come. The Dow Jones was down 151 points or 1.1% to 13,086 at 1500 EDT (2000 BST).
Meanwhile, the more technology-based Nasdaq index lost 0.6 points to 2,542. Meanwhile, the more technology-based Nasdaq index fell 32 points or 1.3% to trade at 2,510.
Shares were hit by warnings of tough times to come from Wal-Mart and Home Depot, as well as news that a big fund manager was struggling.
The falls came despite the Federal Reserve saying it would inject more funds into financial markets if needed.The falls came despite the Federal Reserve saying it would inject more funds into financial markets if needed.
Central bank actionCentral bank action
To ease fears over available credit, sparked by the downturn in the mortgage sector, the Fed has already pumped billions of dollars of emergency funds into the banking system in recent days, twice on Friday and again on Monday. To ease fears over available credit, sparked by the downturn in the mortgage sector, the Fed has already pumped billions of dollars of emergency funds into the banking system in recent days - twice on Friday and again on Monday.
The European Central Bank and the Bank of Japan have made similar moves. The European Central Bank (ECB) and the Bank of Japan have made similar moves.
Wall Street's falls knocked European stocks, with London's FTSE down 18 points to 6,200 by 1545 BST, while Frankfurt's Dax had lost 33 points to 7,442. On Tuesday the ECB injected another 7.7bn euros ($10.4bn; £5.2bn) into the markets but said that conditions were returning to normal.
Asian stocks saw a mixed finish earlier, with Japan's main index closing higher while Australia's fell. Wall Street's falls knocked European stocks, with London's FTSE 100 closing 1.2% lower and Frankfurt's Dax falling 0.7%.
Tokyo's Nikkei index closed the day up 0.3% at 16,844.61, while Sydney's All Ordinaries index fell 0.75% to 5,983. Nervous investors
Sub-prime loans are higher-risk mortgages offered to people with poor credit histories or low wages. The news that Sentinel Management Group, which manages $1.6bn in funds, wanted to stop investors being able to withdraw their money did nothing to improve the mood.
As US interest rates have increased over the past year, a record number of sub-prime borrowers have defaulted on their loans, leading to extreme financial pressures for firms exposed to the sector. The biggest faller by 1500 EDT was Wal-Mart, the world's biggest retailer, which fell more than 5% after lowering its profit forecast because its customers are straining under economic pressures such as high oil prices.
The knock-on effect has been fears that loans will be harder to come by, not only in the housing sector but in the wider economy, leading to an economic slowdown. Also down sharply was another retailer, Home Depot, which warned that its profits would fall this year as a result of the sluggish housing market.