Stocks slump on recession fears

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NEW YORK (CNNMoney.com) -- Stocks slumped Wednesday morning as slumping oil prices, Wachovia's huge loss and other grim corporate earnings exacerbated recession fears.

The Dow Jones industrial average (INDU) lost over 250 points, or 2.8%, in the early going. The Standard & Poor's 500 (SPX) index lost 2.9% and the Nasdaq composite (COMP) lost 1.7%.

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 $3.08 a barrel to $69.10 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.

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.

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.

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.

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.

Yahoo posted a 51% decline in net income and said it would slash 10% of its workforce.

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.