NEW YORK (CNNMoney.com) -- Stocks slumped Wednesday, with the Dow down more than 500 points, as weak earnings and slumping oil prices amplified fears of a global recession.

Global markets slumped. The dollar rallied versus the euro and fell against the yen. Treasury prices rose, lowering the corresponding yields as investors sought safety in government debt.

The Dow Jones industrial average (INDU) lost 514 points, or 5.7%, according to early tallies, after having fallen as much as 698 points during the session. Wednesday's point loss was the Dow's seventh worst ever.

The Standard & Poor's 500 (SPX) index lost 6.1% and closed at its lowest point since April 21, 2003. The Nasdaq composite (COMP) lost 4.8% and closed at its lowest level since June 26, 2003.

With the wild swings in both stocks and commodities Wednesday and over the last few weeks, "fundamentals matter very little right now," said Ned Riley, chief investment strategist at Riley Asset Management. He said that most of what is happening is being driven by traders with a very short-term perspective.

On the upside, lending rates continue to improve, as the efforts of world governments to stabilize financial markets started to kick in. But any relief about the improvement in the credit market has been overshadowed by recession fears.

"Some of these programs are starting to work, but it's going to take a while for borrowing to reach the consumer," he said.

After the close of trade Wednesday, Amazon.com (AMZN, Fortune 500) 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 fourth quarter is critical for retailers as it includes the all-important holiday shopping period. Shares plunged 14% in extended-hours trading.

Stocks fell Tuesday as weak quarterly results and forecasts underscored the depth of what many think is a recession. Wednesday's reports - including a big, surprise quarterly loss from bank Wachovia - added to those worries.

With 140 of the S&P 500 companies reporting results this week, earnings and forecasts are in focus.

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 Thomson Reuters.

"Pound for pound, the reports and especially the guidance have been disappointing," said Terry Morris, senior equity manager at National Penn Investors Trust.

Morris said that it's not surprising that companies are giving conservative guidance, in light of the uncertainty about the economy. However, the weak or sometimes nonexistent forecasts are adding to the bigger worries.

Stocks have tumbled over the last year as the financial market meltdown and economic contraction have weighed on equities. Since hitting an all-time high of 14,164 just over a year ago, the Dow has lost 40%. Since hitting an all-time high of 1,565 at the same time, the S&P 500 has lost almost 43%.

Since hitting a bull-market high of 2,859 nearly a year ago, the Nasdaq has crumbled 43.5%.

Earnings: Wachovia (WB, Fortune 500) reported a $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 (WFC, Fortune 500) and part of the big loss was related to charges associated with that merger. Shares fell 6%.

Dow component Boeing (BA, Fortune 500) reported lower quarterly earnings that missed forecasts on weaker sales that managed to top estimates. A strike and supplier problems hurt profits. Shares fell 7.5%.

Fellow Dow component AT&T (T, Fortune 500) reported higher earnings that were short of estimates, though higher revenue met forecasts. The company also said it added almost 2 million new wireless subscribers, at the high end of analyst estimates. Shares fell 7.6%.

Merck (MRK, Fortune 500) 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 Dow component also lowered its full-year 2008 earnings forecast. Shares fell 6.5%.

McDonald's (MCD, Fortune 500) reported higher quarterly sales and earnings that topped estimates. The company's CEO declared the firm "recession-resistant" in a conference call, AP reported. Shares fell 1.7%.

Late Tuesday, Yahoo (YHOO, Fortune 500) reported lower quarterly earnings that met estimates on higher sales that missed. The company also said it will cut at least 10% of its workforce, or around 1,500 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. Shares gained 2.7% Wednesday.

Also late Tuesday, Apple (AAPL, Fortune 500) 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. Shares gained 5.9%.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by over five to one on volume of 1.56 billion shares. On the Nasdaq, decliners topped advancers by almost six to one on volume of 2.62 billion shares.

Commodities: U.S. light crude oil for November delivery settled down $5.43 to $66.75 a barrel on the New York Mercantile Exchange, a 16-month low.

Oil prices have been dropping since crude peaked at an all-time high of $147.27 a barrel on July 11. But the decline has been a mix of speculators leaving the market and investors betting that a slowing global economy means weaker oil demand. As a result, the falling oil prices haven't helped stock investor sentiment much.

Gasoline prices fell another 3.1 cents overnight, to a national average of $2.858 a gallon, according to a survey of credit-card activity by motorist group AAA. It was the 35th consecutive day that prices have decreased. During that time, prices have fallen by nearly $1 a gallon.

A variety of oil services, metals and mining shares fell in tune with the drop in commodity prices. Dow components Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and Alcoa (AA, Fortune 500) all tumbled.

Baker Hughes (BHI, Fortune 500) reported higher quarterly earnings that topped estimates and higher quarterly sales that missed expectations. Shares of the oil and gas services firm slumped 17%.

The decline in commodity prices and the underlying stocks is essentially "forecasting a recession," Morris said.

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.

Credit market: Lending rates continued to improve Wednesday, extending the recent recovery. (Full story)

Libor, the overnight bank-to-bank lending rate, fell to 1.12% from 1.28% late Tuesday, according to Bloomberg.com. That kept the rate below the Fed's benchmark lending rate of 1.5%, a good sign for the credit market. Libor hit a record 6.88% earlier this month at the height of the market panic.

The 3-month Libor rate, which banks charge each other to borrow for three months, fell to 3.54% from 3.83% late Tuesday.

The TED spread, which is the difference between what banks pay to borrow from each other for three months and what the Treasury pays, narrowed to 2.55% from 2.63% late Tuesday. The spread hit a record 4.65% earlier this month. The narrower the spread, the more willing banks are to lend to each other.

The improvement in bank lending over the last week is seen as key to stabilizing financial markets. However, analysts say rates must continue to come down in the months ahead. Credit froze up in the wake of the housing market collapse, subprime fallout and contraction in the bank sector.

The lack of available credit has punished the already weak economy, making it hard for businesses to function on a daily basis and for consumers to get loans.

Treasury prices rose, lowering the yield on the 10-year note to 3.59% from 3.70% Wednesday. Treasury prices and yields move in opposite directions.

The yield on the 3-month Treasury bill, seen as the safest place to put money in the short term, slipped to 1.01% from 1.19% late Tuesday. However, the yield remained above recent lows as investors began to pull money out of the safer investment and put it back in stocks.

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.

Other markets: COMEX gold for December delivery fell $24.10 to $743.90 an ounce.

In currency trading, the dollar rose against the euro and fell against the yen.