NEW YORK — U.S. stocks fell sharply Tuesday, sending the Dow Jones industrial average down by more than 148 points, with investor enthusiasm hit right at the outset of earnings season after both Home Depot Inc. and Sears Holdings lowered their forecasts.

Concerns about housing and credit markets were revived by a possible rating action on subprime mortgages from Standard & Poor's.

Crude oil prices briefly topping $73 a barrel also added to the market's nervousness, while a speech by Federal Reserve Chairman Ben Bernanke failed to shed light on the central bank's plans for interest rates.

"The market has been down all day," said Jay Suskind, director of trading at Ryan, Beck & Co. "It's a combination of nervousness that housing isn't rebounding, companies are ratcheting down earnings and S&P is questioning the subprime market, throwing that fear into the marketplace again."

The Dow Jones industrial average fell 148 points to 13,501. Of the Dow's 30 components 26 fell, led by financial shares JP Morgan Chase, American Express Co., and Citigroup Inc.

Financials came under pressure after S&P said it put $12 billion worth of subprime mortgage-backed securities on CreditWatch negative.

"There are some concerns in regard to the health of the subprime market," said Mike Malone, trading analyst at Cowen & Co. "If it worsens substantially, it could be an issue for the market, even during earnings season."

General Motors was among the few shares bucking the trend, rising 1.7 percent, thanks to a new upgrade from J.P. Morgan.

The S&P 500 fell 21.7 points to 1,510, while the Nasdaq Composite dropped 30.9 points to 2,639.

Trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 2.2 billion trading on the Nasdaq. Declining issues topped decliners by 25 to 7 on the NYSE and by 22 to 7 on Nasdaq.

By sector, financial shares led the declines, including banks and broker-dealers, such as Goldman Sachs Group Inc., Lehman Brothers Holdings Inc. and Bear Stearns Companies Inc.

Two hedge funds owned by Bear Stearns were brought near to collapse because of their heavy exposure to the subprime mortgage-backed securities.

Adding to the jitters about housing, home-building bellwether D.R. Horton Inc. early Tuesday said quarterly orders for new homes fell 40 percent from a year earlier and that it expects to post a loss after impairment charges.

Alcoa Inc., which kicked off earnings season Monday after the close, fell 1.7 percent after the aluminum producer said its earnings slipped, but matched analysts' expectations, while revenue was weaker than expected.

A report in a U.K. newspaper also said that BHP Billiton Ltd. is in talks with private equity firms to put together a bid for Alcoa.

The market's focus was "on the kickoff of earnings season, which was less than spectacular with Alcoa," said Art Hogan, chief market strategist at Jefferies & Co. "I don't think that piece of the puzzle will give us any positive momentum."

Dampening sentiment at the outset, both Home Depot and Sears issued profit warnings.

Sears fell 9.9 percent after forecasting second-quarter profit will decline amid sales drops at both its Kmart discount chain and Sears department store.

Dow component Home Depot rose 0.1 percent. Even though it lowered earnings forecasts, the company launched a tender offer for 250 million of its shares. The retailer cut its 2007 profit forecast, saying the soft U.S. housing market is bruising earnings more than management had anticipated just two months ago.

Treasury bills rallied, pushing yields below recent highs, as jitters about subprime mortgages led to safe-haven flows.

The benchmark 10-year note finished up 23/32 at 95-24/32 with a yield of 5.038 percent.

The dollar was weaker, also due to the subprime jitters and ahead of Bernanke's speech.

Commodities, which are for the most part dollar-denominated, advanced as the dollar fell.

The August crude oil contract finished up 62 cents to close at $72.81 a barrel.

The front-month gold contract rose $1.90 to close at $664.40 an ounce.

—Distributed by McClatchy-Tribune Information Services