Stocks tumbled Wednesday morning as Wachovia's big quarterly loss and a host of other bleak earnings reports exacerbated recession fears.
Lending rates improved, helping to reassure investors that the efforts of world governments to stabilize financial markets are starting to work. Treasury bond prices rose, lowering the corresponding yields. The dollar was mixed versus other major currencies. Oil, gas and gold prices fell.
With 21% of S&P 500 companies already having reported results, third-quarter profits are currently on track to have fallen almost 10% from a year ago, according to the latest estimates from .
Wachovia reported a huge $24 billion quarterly loss versus a profit a year ago. Analysts expected the bank to report a slim profit, despite the turmoil in financial markets. Wachovia is being bought by Wells Fargo and part of the big loss is related to charges associated with that merger.
Dow component Boeing reported lower quarterly earnings that missed forecasts on weaker sales that managed to top estimates. A strike and supplier problems hurt profits. Shares fell 7%.
Also late Tuesday, Apple reported fourth-quarter sales and earnings that jumped from a year ago due to strong sales of its new iPhone. Earnings beat forecasts, while sales missed expectations. Apple also forecast fiscal first-quarter sales and earnings below analysts' earlier projections.
Lending rates continued to improve Wednesday, extending the recent recovery.
The 3-month Libor rate, which banks charge each other to borrow for three months, fell to 3.54% from 3.83% late Tuesday.
Treasury prices rose, lowering the yield on the 10-year note to 3.66% from 3.70% Wednesday. Treasury prices and yields move in opposite directions.
Last week, the 3-month fell to below 0.2%. Last month, it reached a 68-year low around 0% as investor panic hit its peak.
U.S. light crude oil for November delivery fell $3.08 to 69.10 a barrel on the New York Mercantile Exchange Wednesday morning after hitting a 13-month low last week.
COMEX gold for December delivery fell $17.20 to $750.80 an ounce.