July 31 (Bloomberg) -- U.S. stocks declined, erasing a rally, on concern losses from subprime mortgages are worsening.

Banking shares fell after American Home Mortgage Investment Corp. said it's unable to fund loans and may have to liquidate assets. MGIC Investment Corp. and Radian Group Inc. tumbled after the two home-loan insurers said their combined stakes of more than $1 billion in a subprime mortgage company may be worthless.

The Standard & Poor's 500 Index slipped 4.04, or 0.3 percent, to 1469.87 at 2:33 p.m. in New York. The Dow Jones Industrial Average fell 20.98, or 0.2 percent, to 13,337.33. The Nasdaq Composite Index slumped 12.36, or 0.5 percent, to 2570.92.

American Home Mortgage plunged $9.25, or 88 percent, to $1.22. MGIC lost $7.36, or 16 percent, to $38.08. Radian retreated $8.06, or 20 percent, to $32.14.

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By Eric Martin