Disappointing earnings weighed down the markets during the midday with the Dow falling 26 points to 12,475. Nasdaq tumbled 31 points to 2386.

On the upside

Knight Capital Group (Nasdaq: NITE) reported higher fourth quarter earnings that beat expectations as trading volume rose.

Needham & Co. upgraded Mattel (NYSE: MAT).

PNM Resources (NYSE: PNM) will pay $202.5 million to aquire Continental Energy's Texas electric delivery division and will sell to Continental its New Mexico utility's natural gas operations for $620 million.

On the downside

Sceintific Games (Nasdaq: SGMS) lost its contract to provide terminal based lottery services to the Pennsylvania State Lottery.

Stereotaxis (Nasdaq: STXS) blamed the delayed launch of its heart catheter device for forecasting fourth quarter revenue below expectations and lowered its full year outlook.

Ambac Financial (NYSE: ABK) announced the immediate retirement of chief executive Robert Genader who will be replaced by Michael Callen. The bond insurer will also take $5.4 billion write-down in the fourth quarter and drastically cut its dividend to 7 cents from 21 cents.

In the broad market, declining issues outpaced advancers by a margin of 9 to 7 on both the NYSE and on Nasdaq. The Russell 2000 which tracks small cap stocks lost 3 points to 694.