Stocks Plunge in Late-Day Collapse

Oct. 22, 2008— -- Investors worried about disappointing corporate earnings and the failing health of the U.S. economy sent stocks tumbling for the second consecutive day on Wall Street, mirroring selloffs in markets throughout Europe and Asia.

"It was another one of these days where global recession fears were gripping the market," said Jeff Kleintop, chief investment strategist with LPL Financial.

The Dow Jones dropped more than 200 points soon after the opening bell, and in the final hour it plunged nearly 700 points. On the day it lost 514.45 points to close at 8,519.21, down 5.7 percent.

Click Here to See How Your Stocks Did Today

With technology companies such as Yahoo! and Texas Instruments reporting poor earnings and layoffs, the tech-heavy Nasdaq dropped 80.93 points to close at 1,615.75, down 4.8 percent. The S&P500 closed at 896.78, losing 58.27 points for the day. All the major indices are down more than 30 percent this year.

Thomson Reuters said that of the 128 S&P 500 companies that have reported earnings, profits are down 26 percent on average.

The analysts surveyed by Thomson Reuters believe that number will improve as 372 companies report over the next few weeks. Their estimate is that profits for firms in the S&P 500 will be down by 10 percent.

Their estimates (a combination of both actual results and estimates of the companies that have not yet reported) show financial services as the worst-performing sector, with an 87 percent drop in earnings, and the energy sector as the best performing, with a 52 percent net income rise.

As credit markets slowly improve with the promise of trillions from governments around the globe, investors have now turned their attention to corporate earnings.

And what they see worries them.

Worried About Your Investments? Click Here to Tell ABC News Your Story

From Internet companies like Yahoo to manufacturers such as Boeing, from pharmaceutical giants such as Merck to banks like Wachovia, corporate earnings slumped.

Drugmaker Merck & Co. said Wednesday it will slash 7,200 jobs as part of a new restructuring program that comes as third-quarter profit plunged 28 percent, due to a hefty restructuring charge and flat sales.