Home builders posted significant declines after a government report showed housing starts hit a 10-year low in July, while building permit activity dropped its lowest in nearly 11 years. Shares of luxury home builder Hovnanian Enterprises (HOV: chart) dropped 10%, while home builder Lennar (LEN: chart) was down 5.8%.

Retailers received some support from J.C. Penney (JCP: chart) which gained 1%after posting better-than-forecast quarterly results. Wal-Mart, the world''s largest retailer, added 0.3%, while the world''s largest home improvement chain Home Depot (HD: chart) lost over 1%.

Crude oil futures tumbled 2.1% to $71.76 a barrel on the Nymex. The dollar fell 1.3% at 114.67 yen. Gold lost 1% to $672.80 an ounce. In the first hour of trading, the Dow tumbled 130.96, or 1.02%, to 12,730.51. The S&P''s 500 index was down 14.08, or 1%, at 1,392.62, and the Nasdaq dropped 21.53, or 0.88%, to 2,437.30. The yield on the benchmark 10-year Treasury note fell to 4.66% from 4.72% late Wednesday.


09:00AM U.S. stock futures plunged, dragged by weak housing data and Countrywide Financial.

U.S. stock futures plunged on Thursday following a heavy sell-off the previous session as well as economic data showing new home construction at a 10-year low. Housing starts fell 6.1% in July to a seasonally adjusted annual rate of 1.381 million, lower than the expected fall to 1.40 million.

Countrywide''s decision to tap its entire credit line and a hint from a Fed Reserve official that there won''t be a rate cut soon further weighed on sentiment. The Fed said it would step in with a 14-day repurchase agreement worth $5 billion.

Countrywide Financial (CFC: chart) said it would draw on an $11.5 billion credit facility to fund its operations as difficulty raising money in the credit markets threatened its business. The lender also accelerated its plans to transfer its mortgage production operations into Countrywide Bank. Company''s shares dropped 11% in pre-open trading.

On the earnings news front, J.C. Penney (JCP: chart) posted Q2 earnings above forecast and lifted its full-year profit outlook. Hewlett-Packard (HPQ: chart) is scheduled to release financial results after the closing bell. Among other pre-market highlights, Amgen (AMGN: chart) lost 1.5% on its plans to cut up to 14% of its workforce in order to reduce costs.

The dollar touched a 13-month low vs. the yen. S&P 500 futures fell 16.4 points at 1,397.90 and Nasdaq 100 futures dropping 17.75 points at 1,860.75. Dow industrial futures fell 121 points. Treasury yields fell to 4.667%.

8:30PM Mumbai, 11:00AM New York – Sensex in India fell sharply in sympathy with global declines. Investors remain cautious as U.S. subprime lending worries mount.

Sensex in Mumbai trading plunged 642.70 or 4.3% to 14,358.21, Nifty index fell 4.4% to 4,178.60. Asian markets declined across the region led by 7% loss in Korea and Malaysia. Second largest point decline in Sensex reflected worries that the U.S. subprime mortgage market crisis may deepen further and slow down the economy.

Daily turnover on the Bombay Stock Exchange increased to 5,291 crore rupees from 4,232 crore rupees and on NSE the turnover increased to 11,791 crore rupees from 7,832 crore rupees. Rupee recovered to 4-month high to 41.17 to a dollar.

Finance Ministry reported today that the indirect tax receipts collection increased 11.6% to 66,417 crore rupees in the period between April 2007 and July 2007 on higher than expected collection in customs receipts.

Recently listed real estate management company DLF closed 2.7% to 587 rupees on the news that it plans to spend nearly 20% of its IPO proceeds on land purchase in Delhi. The company is expected to complete its purchase of 38 acre land complex of Swatantra Bharat Mills controlled by DCM Shriram. The land deal worth 1,600 crore rupees is the largest real estate deal in the country. DCM Shriram fell nearly 2% to close at 84.20 rupees.

In other real estate industry news Parsvnath Developers plunged 9% to 299.80 rupees after the board approved the non-convertible debenture of 300 crore rupees. Unitech declined 8% followed by 6% fall in Indiabulls Real Estate and Sobha Developers.
Banks fell in sympathy with the global markets decline led by State Bank of India drop of 6% to 1,521, drop of 5.2% in ICICI Bank to 832 rupees, and 4.6% loss in HDFC Bank to 1,094.

Steel companies led the decliners in the market. Tata Steel plunged 10% to 576 rupees on 26 lakh or 2.6 million share volume. Sterlite Industries fell 8% to 558 rupees, Hindalco fell 5.6% to 145 rupees, and JSW Steel fell 5% to 614 rupees.

Reliance Industries fell 5% to 1,732.90 rupees. The company is expected to gain from the duty of 22,000 rupees per ton on processed yarn from China.

Housing Development and Infrastructure declined 7.5% to 504 rupees. The news report suggested that the company has entered in partnership with Lehman Brothers to develop land occupied by the largest slum in Dharavi, Mumbai.

Bharti Airtel dropped 7% to 798 rupees and Reliance Communication declined 5.7% to 494.35 rupees.