NEW YORK (CNN/Money) - After a dismal day of trading Tuesday, dominated by news of Iraq and Osama bin Laden, Wall Street could have used a dose of good news to help it recover on Wednesday. Instead, it got Applied Materials.

After the closing bell, Applied Materials (AMAT: Research, Estimates), the No. 1 U.S. semiconductor equipment maker, delivered a triple whammy of woe: it missed its fiscal first-quarter earnings estimates, it missed its quarterly sales estimates and it warned fourth-quarter earnings would disappoint, as well.

Stocks fell Tuesday on reports of a message, purportedly by Osama bin Laden and aired on the Qatar-based Al-Jazeera network, that called for solidarity among Muslims against a potential U.S. -led military attack on Iraq. U.S. Secretary of State Colin Powell told a Senate panel that the message showed bin Laden, head of the Al Qaeda terrorist network, was "in partnership with Iraq."

"The market was wary anyway, and people got more skittish as the day went on," said Hedi Reynolds, head of Nasdaq trading at Morgan Keegan. "We had people more cautious. People definitely were on edge."

The Dow Jones industrial average (down 77.00 to 7843.11, Charts) fell 0.97 percent, dropping sharply just before the tape was aired in the U.S. but lifting off its lows before the close. The S&P 500 index (down 6.77 to 829.20, Charts) slid 0.81 percent and Nasdaq composite (down 1.22 to 1295.46, Charts) lost 0.09 percent. The Dow had started the week on a positive note, after four straight losing weeks, but erased all its gains. The Nasdaq composite index has advanced about 1 percent so far this week.

Wall Street also worked to discern the message behind Federal Reserve Chairman Alan Greenspan's remarks to Congress on the health of the U.S. economy, the central bank's monetary policy and the Bush administration's proposed tax package.

In his prepared remarks, which were followed by questions from Senate Banking Committee members, Greenspan said policy makers should wait for the geopolitical tensions to clear before implementing large-scale stimulus measures. He also called for more discipline to control the swelling federal budget deficit.

"Greenspan is guardedly optimistic, but for the uncertainty that Iraq presents," said Douglas Altabef, managing director at Matrix Asset Advisors.

The Fed chairman said the central bank believes that when the risk of war with Iraq is lifted, business spending and the economy will rebound, although he said that is not certain.

"People were really wondering if Greenspan would say anything new on the economic front, but he didn't," said Matt Ruane, director of listed trading at Gerard Klauer Mattison & Co. "All eyes are still on the Middle East. It's a sideways market and I think it will continue to be until we go into the Middle East."

After the bell Tuesday, Prudential (PRU: down $0.50 to $29.90, Research, Estimates) also reported earnings that missed analysts' estimates. The brokerage house reported a fourth-quarter profit of 43 cents a share, missing Wall Street's average forecast by 2 cents. Shares of Prudential fell 1.7 percent in Tuesday trading.

Network Appliance (NTAP: up $0.24 to $10.77, Research, Estimates) said it earned 6 cents a share for its fiscal third quarter, in line with a consensus of analysts surveyed by Briefing.com. Shares of the networking provider lost more than 2 percent after hours.

No notable economic reports were planned for Wednesday.

But some companies are set to release fiscal results for the quarter. Among those scheduled to report is Dow component Coca-Cola (KO: down $1.06 to $39.00, Research, Estimates). A consensus of economists surveyed by Briefing.com forecast the beverage maker would post a profit of 40 cents a share, compared with 37 cents in the year-earlier period.

Media conglomerate Viacom also planned to release quarterly data Wednesday.

Corporate news Tuesday mostly swirled around quarterly earnings.

Insurers MetLife (MET: down $1.38 to $24.62, Research, Estimates) and Aetna (AET: up $1.55 to $43.40, Research, Estimates) both said they swung into profits for the fourth quarter. Aetna posted a profit of 63 cents a share, compared with a year-earlier loss of $1.30 a share. Met Life reported net income 78 cents a share, compared with a net loss of 40 cents share in the year-ago period. MetLife also reiterated its 2003 guidance. MetLife shares slipped more than 5 percent, while Aetna rose more than 3 percent.

Shares of Scholastic (SCHL: down $7.71 to $25.95, Research, Estimates), publisher of the Harry Potter series of books among others, sank more than 23 percent after the company warned late Monday that its 2003 profit would fall well below analyst estimates. Scholastic was among the top 10 most actively traded issues on the Nasdaq.

Bond prices were mixed, with the benchmark 10-year Treasury note rising 1/8 of a point in price, for a yield of 3.95 percent. The dollar was slightly lower against the euro and flat versus the yen.

Light crude oil for March delivery rose 96 cents to $35.44 a barrel. Gold for April delivery fell $1.20 cents to $363 an ounce in New York.

Overseas, European markets mostly closed higher. Stocks in the Asia-Pacific region ended their trading session mostly lower.

Market breadth turned negative late in the day. On New York Stock Exchange, losing stocks beat winning stocks 10 to 7 on volume of 1.3 billion shares. On the Nasdaq, decliners beat advancers 6 to 5 as 1.3 billion shares changed hands.