Mid-Day Report

Despite stronger than expected growth in the service sector in October, the markets tumbled during the midday over continued losses in the mortgage industry. The Dow dropped 59 points to 13,536 while Nasdaq fell 16 points to 2795.

On the upside

Gramercy Capital will pay $3.4 billion in cash and stock to acquire American Financial Realty Trust (NYSE: AFR).

The Wall Street Journal reported that the investigation of WellCare Health Plans (NYSE: WCG) involved inflated mental health care costs. Several analysts commented that the alleged practices were not very significant and upgraded the health insurer.

IAC/InterActive (Nasdaq: IACI) will split into five separate publicly traded businesses. IAC will retain 30 businesses while spinninig off HSN, Ticketmaster, Interval and LendingTree.

On the downside

Novacea (Nasdaq: NOVC) halted late stage clinical trials of its prostate cancer treatment Asentar after more patients died than those using a standard medication.

Mentor Graphics (Nasdaq: MENT) blamed a large setback in orders for warning of a third quarter loss.

After reporting disappointing sales for the third quarter, plastic shoe maker Crocs (Nasdaq: CROX) annnounced a stock repurchase plan to buy back 1 million shares.

In the broad market, declining issues outpaced advancers by a margin of more than 3 to 1 on the NYSE and by a margin of more than 2 to 1 on Nasdaq. The Russell 2000 which tracks small cap stocks fell 8 points to 790.

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