US stocks dropped sharply on Wednesday, with the S&P index briefly falling more than 2 percent, as fear of more credit market turmoil heightened worry about prospects for the economy and profits. New York Attorney General Andrew Cuomo announced his office was sending subpoenas to government-sponsored mortgage financiers Fannie Mae and Freddie Mac as part of a probe of the home loan industry.
Shares of Fannie Mae were down 9.7 percent at $50.01 while Freddie Mac was down 7.3 percent at $45.82. The Dow Jones industrial average was down 239.80 points, or 1.76 percent, at 13,421.14. The Standard & Poor's 500 Index was down 29.37 points, or 1.93 percent, at 1,490.90. The Nasdaq Composite Index was down 49.73 points, or 1.76 percent, at 2,775.45.
Investment bank Morgan Stanley dropped 6.7 percent to $50.85, while Washington Mutual slid 15.5 percent to $20.48. The S&P financial index fell 3.7 percent. General Motors Corp posted its biggest-ever quarterly loss, making stock of the largest US automaker among the top decliners on the Dow. GM shares fell 5.7 percent to $34.10.