NEW YORK - US STOCKS slumped at the opening on Tuesday as data showing a surge in wholesale inflation and a fresh decline in the housing sector added to concerns about renewed troubles in the financial sector.

The Dow Jones Industrial Average lost 57.32 points (0.50 per cent) to 11,422.07 in the opening minutes after a 1.5 per cent slide for the blue chips on Monday.

The Nasdaq composite shed 10.64 points (0.44 per cent) to 2,406.34 and the Standard & Poor's 500 index retreated 5.00 points (0.39 per cent) to 1,273.60.

The market, reeling from losses on Monday linked to worries about the solvency of Freddie Mac and Fannie Mae, digested news that wholesale prices spiked by their largest margin in 27 years in the year to July, 9.8 per cent.

A separate report showed construction of new homes plunged 11 per cent in July to a 17-year low.

Those reports only fanned fears of traders who had dragged stocks lower on Monday amid reports that the government-sponsored enterprises, mortgage giants Fannie Mae and Freddie Mac, might be close to a bailout that could have wide-ranging implications.

'The credit crisis obviously didn't end at mid-2008,' said Ed Yardeni at Yardeni Research.

'It isn't even obvious that the worst is over. The latest turmoil among the GSEs (Fannie and Freddie) and the widening credit quality spreads in the money and bond markets is certainly unsettling. Banks will have to refinance lots of their maturing bonds during the second half of this year. They will have to pay higher yields and that will force them to raise their lending rates.' -- AFP