Overnight Markets: Wall Street tumbles on mortgage worries

Wall Street on Tuesday fell sharply posting biggest loss in two months amid fears banks will be forced to buy back soured mortgages and after disappointing financial results from Apple and IBM.

The Dow Jones industrial average declined 165 points, or 1.48%, to 10,979. The Standard & Poor's 500 Index lost 19 points, or 1.59%, to 1,166. The Nasdaq Composite Index fell 44 points, or 1.76%, to 2,437.

Bank of America shares plunged 4.4% after a report said investors PIMCO and BlackRock, along with the New York Federal Reserve Bank, were seeking to force the lender to repurchase $47 billion in mortgage bonds. Other financials followed with Citigroup declining 2.6% and Wells Fargo shedding 1.3%. However, Goldman Sachs was up 2% after its profits beat analysts' estimates.

Equity markets faced another shock when China decided to raise interest rates in an unexpected credit tightening to curb property-price inflation. The move drove the dollar higher as investors cut exposure to risk, putting downward pressure on commodities and related stocks.

Apple's shares declined 2.7% after iPad sales fell short of some analysts' expectations. International Business Machines Corp dropped 3.4% after it won fewer technology service deals than expected in the third quarter.

Elsewhere, Microsoft declined 2.8% to $25.10 after it said Ray Ozzie, its chief software architect, was stepping down.

In current trading, Asian equities fell on Wednesday after China unexpectedly raised its lending and deposit rates.

The MSCI Asia Pacific Index declined 1% to 129 as of 9:48 a.m. in Tokyo. Japan’s Nikkei 225 Stock Average dropped 2.2%. Korea’s Kospi Index decreased 0.5%. Australia’s S&P/ASX 200 Index slid 1.4%. New Zealand’s NZX 50 Index lost 0.6%. In China, the Shanghai Composite Index dropped 39, or 1.3%, to 2,963 as of 10:04 a.m. The CSI 300 Index slipped 1.3% to 3,331.