U.S. stocks fell on Thursday for a second day, led by a drop in financial shares amid news of further credit market problems, lower retail sales at J.C. Penney, and Wells Fargo's dour assessment of the housing market.

In late morning trading, J.C. Penney Co. Inc. (NYSE:JCP) shares drop by 3.98 percent or 1.86 points to $44.84 after the retailer slashed its fourth-quarter profit outlook by at least 25 percent. J.C. Penney dropped to a two-year low after it reported a smaller profit and cut its earnings forecast.

Wells Fargo (NYSE:WFC), the second-largest U.S. mortgage lender, declined the most in a week . Speaking at a at a Merrill Lynch & Co banking conference in New York, Wells Fargo CEO John Stumpf said the credit losses related more to the severity of bad loans than the frequency. The company reported its first profit decline in three quarters after sales fell. Shares of Wells Fargo slumped 2.29 percent, or $0.76, $32.48.

The Dow Jones industrial average fell 7.7 points, or 0.06 percent at 13,183.37. The Standard & Poor's 500 Index was down 4.70 points, or 0.32 percent, at 1,465.88. The Nasdaq Composite Index was dropped 4.53 points, or 0.17 percent, at 2,639.79.

Wells fargo U.S.