Flat consumer spending and disappointing earnings news sent the markets tumbling during the midday with the Dow plummeting 196 points to 12,386. Nasdaq plunged 38 points to 2294.

On the upside

3Com (Nasdaq: COM) is in negotiations with prospective buyers Bain Capital Partners and Huawei Technologies for ways to limit Huawei's participation in business related to the federal government.

Billionaire investor Wilbur Ross will invest up to $1 billion in Assured Guaranty (NYSE: AGO).

Increased demand lifted third quarter earnings for Omnivision Technologies (Nasdaq: OVTI) to beat expectations.

On the downside

Sonus Networks (Nasdaq: SONS) released preliminary fourth quarter revenue that missed expectations and forecast disappointing results for 2008.

Although strong sales lifted fourth quarter earnings for Deckers Outdoor (Nasdaq: DECK) to beat estimates, the shoe company provided first quarter guidance below expectations.

Fremont General (NYSE: FMT) is considering strategic alternatives including the possible sale of the company because it may have to record additional write-downs.

In the broad market, declining issues overwhelmed advancers by a margin of 6 to 1 on the NYSE and more than 3 to 1 on Nasdaq. The Russell 2000 which tracks small cap stocks tumbled 12 points to 693.