US stocks slumped on Wednesday, with the Dow down more than 500 points, as weak earnings and slumping oil prices increased fears of a global recession. The DJIA closed 514 points lower at 8519.21 after having fallen as much as 698 points during the session, the S&P500 fell 58.27 points to close at 896.78 and the Nasdaq fell 80.93 points to close at 1615.75. The S&P500 closed at its lowest level since April 21 2003 and the Nasdaq closed at its lowest level since June 26 2003.
After the close of trade, Amazon.com reported higher quarterly earnings that topped estimates on higher sales that missed estimates. But Amazon warned that 2008 revenue won't meet forecasts because the fourth quarter isn't shaping up as well as had been forecast. The stock plunged 14 percent in extended hours trading.
Wachovia reported a $24bn quarterly loss versus profit a year ago. Analysts expected the bank to report a slump in profit, despite the turmoil in financial markets. The stock fell 6 percent.
Boeing reported lower quarterly earnings that missed forecasts on weaker sales that managed to top estimates. A strike and supplier problems hurt profits. The stock fell 7.5 percent.
AT&T reported higher earnings that were short of estimates, though higher revenues met forecasts. The company also said it added almost 2 million new wireless subscribers, at the high end of analyst estimates.
Merck reported lower quarterly earnings that topped estimates on lower quarterly revenue that missed estimates. The drugmaker also said it will cut 7,200 jobs as part of a restructuring program. The company also lowered its full year 2008 earnings forecast. The stock fell 6.5 percent.
McDonalds reported higher quarterly sales and earnings that topped estimates. The company's CEO declared the firm "recession-resistant" in a conference call, AP reported. The stock fell 1.7 percent.
Yahoo reported lower quarterly earnings that met estimates on higher sales that missed. The company also said it will cut at least 10 percent of its workforce, or around 1500 people, through the end of the year as a result of the weak economy. Looking forward, Yahoo warned that 2008 revenue won't meet its earlier forecasts. The stock gained 2.7 percent.
Baker Hughes reported higher quarterly earnings that topped earnings and higher quarterly sales that missed expectations. The stock slumped 17 percent.
In economic news, the number of layoffs impacting 50 workers or more rose to the highest level in September since the month of the 9/11 terrorist attacks.
US light crude oil for November delivery settled down $5.43 to $66.75 a barrel on NYMEX, a 16 month low.
Gasoline prices fell another 31 cents overnight, to a national average of $2.858 a gallon.
Treasury prices rose, lowering the yield on the 10 year note to 3.59 percent from 3.7 percent.
The yield on the 3 months Treasury bill slipped to 1.01 percent from 1.19 percent.
COMEX gold for December delivery fell to $24.10 to $743.90 an ounce.
The dollar rose against the euro and fell against the yen.
The Nikkei average hit its lowest point since May 2003 today, then pared its losses to end down 2.5 percent after a report that the U.S. administration may consider a $40 billion proposal to help forestall foreclosures. Honda Motor Corp and other exporters dragged on the market as the yen climbed against the dollar and the euro on growing worries about the global economy, while bank shares such as Mizuho Financial Group were also battered. The Wall Street Journal said Federal Deposit Insurance Corp Chairman Sheila Bair is expected to suggest in a Senate Banking Committee on Thursday that the government give banks incentives to turn troubled loans into more affordable mortgages, according to a person familiar with her testimony. The report sparked buying of U.S. stock futures, which in turn set off short-covering in Nikkei futures and helped the cash market trim losses.
The benchmark Nikkei shed 213.71 points to 8,460.98 after earlier falling as low as 8,016.61, its lowest in nearly five and a half years and down more than 7 percent.
UK stocks ended 4.5 percent lower on Wednesday, with mounting recession fears further undermining sentiment on ailing banks and demand worries knocking commodity stocks. The FTSE100 closed 188.8 points lower at 4040.89. Energy stocks tracked crude prices lower, with oil falling to a 16 month low below $68 a barrel on growing fears that output cuts by OPEC will not be enough to offset weakening energy demand from leading consumers. BP slid 5.5 percent, Royal Dutch Shell lost 4.1 percent and Cairn Energy lost 5.2 percent.
Weaker metal prices also weighed on mining stocks, with BHP Billiton, Rio Tinto, Xstrata, Antofagasta, Anglo American, Vedanta Resources and Kazakhyms falling 6.7 to 15.5 percent. BHP warned that Chinese demand was set to weaken, but the company showed little sign of trimming production, lifting quarterly iron ore output by 15 percent.
Bank of England Governor Mervyn King said in a speech Tuesday night Britain's economy was probably entering its first recession in 16 years. This dampened sentiment further, and send the pound tumbling to its lowest level in over five years against a resurgent dollar. The Bank of England minutes showed all nine MPC members voted for this month's globally co-ordinated 50 basis point emergency cut in interest rates.
Bank were among the biggest blue chip losers. Barclays, RBS, HBOS Lloyds TSB, HSBC and Standard Chartered dropped between 1.7 and 13.9 percent.
Retailers were also lower amid the gloomy economic outlook. Marks and Spencer, Next and Kingfisher were off between 2.3 and 7.7 percent, while Sainsbury and Tesco both fell 4.8 percent.
BskyB, Smiths Group and Whitbread fell after going ex-dividend.
British Airways was the top gainer, up 4.3 percent with traders citing bid interest from Cathay Pacific.
GlaxoSmithkline gained 1.3 percent after third quarter profits beat expectations, helped by a weaker sterling. The company was the only one in positive territory, helped by the fact that the stocks are seen as a defensive play. AstraZeneca gained 1.5 percent.
Man Group gained 3 percent after it said the net asset value of its main AHL fund rose 1.9 percent last week.
Barratt Development, Taylor Wimpey and Persimmon gained between 2.5 and 4.1 percent on hopes that the UK may cut interest rates further next month.