By Kate Gibson, MarketWatch NEW YORK (MarketWatch) -- U.S. stocks fell sharply Wednesday, pushing the Dow Jones Industrial Average below the 9,000 level, as investors focused on the slumping global economy and its impact on corporate earnings. Among the bright spots in a slew of generally bleak profit reports, Apple Inc.topped expectations but also stuck to its pattern of offering an outlook below the existing analyst forecasts. Apple rose nearly 8.2% in early trade. Read full story. And fast-food giant McDonald's Corp. posted an 11% rise in third-quarter profit. See full story. "It's been a bad earnings season, and what companies tell us has not been inspiring. The news has been gloomy, and, if we believe executives, it is going to get even more gloomy," said Hugh Johnson, chairman of Johnson Illington Advisors. After having fallen more than 400 points, the Dow industrials were down 236.72 points, or 2.6%, to 8,796.94 in late-morning trades, with all but two of its components suffering declines in the early going. Alcoa Inc. led the Dow's losses, off 7.4%. The S&P 500 declined 26.84 points, or 2.8%, to 928.21, with energy, materials and telecommunication services leading declines that stretched across all 10 of the index's industry categories. "The third quarter of 2007 was the start of the earnings debacle," said Johnson, noting that the 4.8% drop marked the first time in 22 quarters that the S&P 500's operating results showed a decline in earnings on a year-on-year basis. Six months ago, investors thought there was a chance that year-over-year earnings would again turn positive in the third quarter of 2008, said Johnson. "We're down 10.8% so far from [the] third quarter of 2007. The second piece of bad news is the number of positive surprises is down, and the number of disappointments is up." The technology-laden Nasdaq Composite shed 24.27 points, or 1.4%, to 1,672.41. Greenback gains The dollar pulled strongly higher against the euro and the British pound. Read Currencies. Asian stocks were hammered, with the Nikkei 225 skidding 6.8% in Tokyo as the dollar fell below the 100 yen level. Read Asian Markets. In London, the FTSE 100 dropped 4%. See London Markets. On the New York Mercantile Exchange, gold futures fell $20.7 to $747.3 an ounce. Read Metals Stocks. Oil fell for a second day, with crude futures down $4.04 to $68.14 a barrel in New York morning action, after weekly data showed a rise in inventories. Read Futures Movers. Wal-Mart Stores Inc. CEO Lee Scott, speaking in Beijing, said consumer spending appeared to have been on the mend over the last week and a half and said the U.S. economy would recover faster if energy prices remain relatively low. Treasury prices advanced, pushing 10-year note yields to two-week lows, as investors worried about a global slowdown sought safety in government debt. See Bond Report. Corporate news Pharmaceutical giant Merck & Co. Inc. announced 7,200 job cuts, Boeing said earnings fell 38%, and Wachovia reported a $23.9 billion loss as Wells Fargoprepared to buy the Charlotte, N.C., bank. AT&T Inc. reported a 5.5% profit rise, helped by 3G iPhone sales. Yahoo Inc. advanced 4.9% after saying it would cut 10% of its workforce amid a sharp decline in quarterly profit. Read more. U.S. stocks had closed lower Tuesday on a cautious earnings outlooks, as well as profit taking from Monday's surge. The Dow Jones Industrial Average dropped 231 points, the Nasdaq Composite lost 73 points, and the S&P 500 dropped 30 points.

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