Stocks are sinking early on, giving back some of a big gain

NEW YORK (AP) — U.S. stocks are lower Wednesday morning following their biggest gain in more than six months. IBM tumbled after it announced disappointing quarterly revenue and homebuilders are sinking after the Commerce Department said construction of new homes dropped in September. Netflix jumped after it announced big subscriber gains, which relieved investors after the stock had slumped over the summer.

KEEPING SCORE: The S&P 500 index fell 16 points, or 0.6 percent, to 2,793 as of 10:15 a.m. Eastern time. The Dow Jones Industrial Average slumped 224 points, or 0.9 percent, to 25,573 as IBM fell sharply. The Nasdaq composite slid 45 points, or 0.6 percent, to 7,599. The Russell 2000 index of smaller-company stocks lost 14 points, or 0.9 percent, to 1,583.

Stock trading has been erratic recently, including a six-day losing streak that included huge drops last Wednesday and Thursday. Then on Friday the S&P 500 jumped 1.4 percent, its biggest rally in three months, fell on Monday and surged again on Tuesday. Trading had been steady from late June to early October.

CRIBS: U.S. home construction fell 5.3 percent in September, according to the Commerce Department. The pace of homebuilding has slowed since May, and the report is the latest sign that rising mortgage rates may be weighing on the market. Mortgage buyer Freddie Mac says that the average 30-year fixed-rate mortgage jumped to 4.9 percent last week, the highest level since 2011. The combination of higher borrowing costs and rising home values has made home ownership less affordable.

Lennar gave up 2.9 percent to $42.83 and PulteGroup shed 3.7 percent to $22.75. D.R. Horton skidded 2.3 percent to $37.75. Home Depot fell 3.8 percent to $186.18 and Lowe's sank 3.4 percent to $102.42. The home improvement retailers have climbed in recent years as rising home prices pushed many homeowners to renovate their own homes instead of trying to buy new ones.

BIG BLUES: IBM sank 7.3 percent to $134.52 after its sales in the third quarter fell short of analysts' estimates. The technology company is on track for its worst loss since April.

THE NEXT EPISODE: Netflix climbed 5.6 percent to $365.70, which put the streaming video company on track for its biggest gain in six months. It reported surprisingly strong subscriber growth in the third quarter and picked up 7 million users, a total that was above Netflix's own projections as well as analyst forecasts.

The stock set a record high in early July and tumbled after it reported disappointing subscriber totals and gave a weak third-quarter forecast a few days later. By mid-August the stock had dropped 24 percent, a big setback for one of the biggest winners on Wall Street in the last few years.

The big gain for Netflix meant internet stocks were little changed while other groups of stocks traded lower. Technology companies and retailers took the worst losses.

BONDS: Bond prices were little changed. The yield on the 10-year Treasury note stayed at 3.15 percent.

ENERGY: U.S. benchmark crude lost 1.7 percent to $70.71 a barrel in New York. Brent crude, the international standard, fell 1.3 percent to $80.33 a barrel in London.

CURRENCIES: The dollar slipped to 112.08 yen from 112.18 yen. The euro fell to $1.1544 from $1.1578.

OVERSEAS: Germany's DAX fell 0.5 percent and the French CAC 40 also lost 0.5 percent. In Britain, the FTSE slipped 0.1 percent.

Japan's benchmark Nikkei 225 jumped 1.3 percent and the Kospi in South Korea advanced 1 percent. Markets in Hong Kong were closed for a holiday.

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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP