US stocks took a dip on Tuesday as the subprime mortgage crisis escalated after Standard & Poor's said it may cut ratings on $12 billion of subprime-related debt, undermining banking shares.

Concerns about corporate earnings also hurt investor confidence after profit warnings from a few major companies. The market extended losses in afternoon trading after a speech by Federal Reserve Chairman Ben Bernanke failed to address monetary policy.

So on Tuesday, The Dow Jones Industrials dropped 148 points closing at 13,502; the S&P500 lost 22 points falling to 1,510, and the Nasdaq was down 31 points finishing at 2,639.

In company news, Shares in Chicago Mercantile Exchange Holdings eased 1.71% to $560.80 after shareholders of the CME and Chicago Board of Trade voted to merge the two giant futures exchanges under one roof. A vote that once looked like it might be a toss-up, given a higher competing bid for CBOT from IntercontinentalExchange, turned into a landslide. The newly formed CME Group will be the world's largest derivatives exchange and control more than 85 per cent of US futures and options-on-futures volume.