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. 

At 8:27 a.m. ET, Dow Jones industrial average, S&P 500 and Nasdaq 100 futures were lower. Futures measure current index values against the perceived future performance and can be an indication of how markets will perform at the open.

Earnings jitters hit Wall Street on Tuesday. The Dow finished the session down 2.5%. The S&P 500 lost 3% and the Nasdaq shed 4.1%.

The nervousness spread to overseas markets. Japan's Nikkei index plunged about 7% Wednesday, leading a wave of selling in Asia. Shares in Europe slid in morning trading.

Oil: Crude oil prices were down $2.70 a barrel to $69.48 in electronic trading on the New York Mercantile Exchange. Traders awaited the U.S. Department of Energy's weekly report on fuel inventories, due after the stock market open.

The petroleum supply report is expected to show that inventories increased by 2.9 million barrels last week, according to an average of analyst estimates from Platts, an energy information service.

Alarmed at the slow demand for oil, OPEC has planned an emergency meeting in Vienna, Austria, on Friday to consider slashing production by one million barrels a day.

Corporate results: The banking company Wachovia (WB, Fortune 500) reported an unexpected loss of $11.18 per share for the third quarter. That was dramatically worse than the 2 cents per share net profit projected by a consensus of analysts from Thomson FirstCall. Wachovia shares fell 4% in premarket trading.

The drugmaker Merck (MRK, Fortune 500) reported that earnings rose to 80 cents per share for the third quarter - excluding a 29-cent-per-share charge for restructuring costs - from 75 cents in the same period last year. The company plans to downsize its staff by 12% this year. Merck fell less than 1% in premarket trading.

Another drugmaker, Wyeth (WYE, Fortune 500), reported the same 84-cents-per-share profit for the third quarter as it did a year earlier.

AT&T (T, Fortune 500) reported earnings rose to 55 cents per diluted share for the third quarter, from 50 cents per share a year earlier. The diluted earnings did not include the 10-cent-per-share gain from strong sales of the Apple iPhone 3G, or the hurricane-related charge of 2 cents per share, the telecom said. AT&T shares rose slightly in pre-market trading.

The aircraft maker Boeing (BA, Fortune 500) blamed a machinists' strike for a 33% plunge in earnings, to 96 cents per share for the third quarter. Boeing shares lost about 2% in the pre-market.

General Dynamics (GD, Fortune 500), a defense industry contractor, said third-quarter earnings rose to $1.59 per share from $1.34 a year earlier. Shares were up 5% before hours.

The fast food chain McDonald's (MCD, Fortune 500) said sales rose 7.1% in the third quarter, driven by the Big Mac and other familiar food items. That led to a 27% surge in earnings to $1.05 per share.

Tech giants Apple (AAPL, Fortune 500) and Yahoo (YHOO, Fortune 500) garnered attention after posting results late Tuesday.

Apple reported a jump in profit, but issued an uncertain outlook. Its shares were up 9% in premarket trading.

Yahoo posted a 51% decline in net income and said it would slash 10% of its workforce. Those job cuts may be a factor in the stock's 5% gain in premarket trading.

Currencies. The dollar climbed against the euro and the British pound amid growing speculation that central bankers in Europe will start cutting interest rates to jump-start growth. But the dollar slipped against the yen.

Company news. Credit rating agencies Standard & Poor's, Moody's and Fitch Ratings are back in the hot seat. A hearing on their actions leading up to the financial crisis will be held on Capitol Hill. 

The Dow Jones industrial average (INDU) lost 231 points or 2.5%. The Standard & Poor's 500 (SPX) index lost 3.1% and the Nasdaq composite (COMP) lost 4.1%.

Lending rates continued to improve, helping to reassure investors that the efforts of world governments to try and stabilize financial markets are starting to work. But relief about the credit markets was countered by broader fears about a recession and the health of American corporations.

"The credit market is improving, which is good, but the problem is that everyone is focused right now on earnings as a representation of the economy," said Greg Church, founder and president of Church Capital. "And while there will be exceptions, the overwhelming number of earnings reports won't be positive."

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.

After the close, Yahoo (YHOO, Fortune 500) reported earnings of four cents a share, versus 11 cents a year ago and short of analysts' forecasts for a profit of 9 cents per share. 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. However, shares gained 7% in extended-hours trading.

Also after the close, 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 topped forecasts, while sales missed expectations.

Looking forward, Apple forecast fiscal first-quarter sales and earnings that are short of analysts' projections. The company said forecasting the December quarter was a challenge because of the weak economy. Shares gained 4% in extended-hours trading.

The Dow gained 413 points Monday on improved lending rates and comments from Federal Reserve Chairman Ben Bernanke that supported a second fiscal stimulus package. It was the Dow's eighth-biggest one-day point advance ever, but did not spark a follow-up rally Tuesday.

"I think the tone in the stock market has been a little better recently with the credit spreads coming down," said Robert Loest, portfolio manager at Integrity Funds. "But I'm reluctant to get too optimistic because the economy is going to continue to deteriorate both in the U.S. and abroad."

Earnings: Dow component American Express (AXP, Fortune 500) reported weaker quarterly profit after the close of trade Monday. However, the results were better than expected and shares gained 8.4% Tuesday. (Full story)

Four other Dow components reported results Tuesday morning, including 3M (MMM, Fortune 500), which reported higher quarterly sales and earnings that topped estimates. Shares gained 4.8%.

DuPont (DD, Fortune 500) reported a big drop in earnings due to manufacturing disruptions in the wake of Hurricane Ike. The chemical giant also warned that full-year results won't meet forecasts. Shares fell 8%.

Caterpillar (CAT, Fortune 500) reported lower earnings and higher revenue versus a year ago, and shares fell 5%. Pfizer (PFE, Fortune 500) reported higher quarterly earnings that topped estimates. Shares were little changed.

Texas Instruments (TXN, Fortune 500) reported reduced third-quarter profit after the close Monday and forecast fourth-quarter revenue would fall sharply, missing estimates. The chipmaker also said it is looking to sell part of its wireless operations. Shares fell 6.3% Tuesday.

Among other companies releasing results, troubled bank National City (NCC, Fortune 500) reported a bigger-than-expected loss Tuesday and said it was cutting 4,000 jobs. However, investors lifted the shares, which have been battered soundly over the last few months on fears about the firm's solvency. The stock added 3%.

Citigroup (C, Fortune 500) slumped 6% in tune with the broader selloff and also in response to Goldman Sachs' reinstatement of its sell rating on the company.

In other company news, Kirk Kerkorian's Tracinda is dumping 7.3 million shares of Ford Motor (F, Fortune 500) and could end up selling the rest of his 6% stake in the automaker. Ford shares lost 6.9%.

A number of stocks that had led the advance Monday retreated Tuesday, including oil services firms Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500), ConocoPhilips (COP, Fortune 500) and BP (BP).

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by over two to one on volume of 1.16 billion shares. On the Nasdaq, losers beat winners by five to two on volume of 2.17 billion shares.

Credit market: Lending rates continued to improve Tuesday, extending the weeklong recovery.

Libor, the overnight bank-to-bank lending rate, fell to 1.28% from 1.51% Monday, according to Bloomberg.com. That set 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 3.83% from 4.06% late Monday.

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 2.63% from 2.97% late Monday. 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 critical and analysts say it must continue to improve in the months ahead. Credit froze up in the wake of the housing market collapse, the subprime lending 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.

The Federal Reserve and banks around the world have made potentially trillions of dollars available to lending institutions. On Tuesday, the Fed said it will start buying commercial paper from money market mutual funds. Commercial paper is a short-term funding source that companies need for daily operations.

Treasury prices rallied, lowering the yield on the 10-year note to 3.70% from 3.84% late Monday. 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, rose to 1.19% from 1.05% late Monday 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: In global trade, Asian markets ended higher and European markets ended lower.

U.S. light crude oil for November delivery fell $3.36 to settle at $70.89 a barrel on the New York Mercantile Exchange after hitting a 13-month low last week.

Oil prices have been slowing 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 3.4 cents overnight, to a national average of $2.889 a gallon, according to a survey of credit-card activity by motorist group AAA. It was the 34th consecutive day that prices have decreased - in the past month alone, they're down more than 93 cents a gallon.

COMEX gold for December delivery fell $22 to $768 an ounce.

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