Wall Street indices tumbled again on Wednesday as US investors reacted to a series of depressing earnings reports that offered more signs of a sharp economic downturn in the US and abroad.

The Standard & Poor's 500 dropped 6.1 per cent and hit its lowest level since April 2003. That followed market slides in Asia and Europe, where the blue-chip Stoxx 50 index dropped 5 per cent in late trading as concerns set in about the outlook for the global economy and profits.

Commodity producers saw their stocks plunge amid sharp falls in the prices of crude oil, gold and copper. The poor earnings reports were led by the banking, airline and health sectors.

Wachovia Corp, the troubled bank being acquired by Wells Fargo & Co, reported $24 billion in losses in the third quarter - one of the highest for any bank since the financial crisis began more than a year ago.

Aerospace giant Boeing reported third-quarter earnings had dropped 38 per cent as the company was hit by the costs of a protracted machinists' strike.

The US pharmaceutical concern Merck & Co said it would cut 7,200 jobs, or 12 per cent of the workforce, as third quarter earnings fell 2 per cent, to $5.9 billion.

The blue-chip Dow Jones Industrial Average plummeted 514.45 points, or 5.69 per cent, to close at 8,519.21. The broader based Standard & Poor's 500 fell 58.27 points, or 6.1 per cent, to 896.78, while the high-tech Nasdaq Composite Index lost 80.93 points, or 4.77 per cent, to close at 1,615.75.

On currency markets, the dollar rose to its highest level in two years against the euro to 77.77 euro cents from 76.49 euro cents on Tuesday. The US currency dropped against the Japanese yen to 97.87 yen from 100.24 yen on Tuesday.

The credit freeze, which has prompted massive government interventions in the US and Europe, thawed a little more on Wednesday.

The London interbank offered rate, or Libor, for three-month loans in dollars slid 29 basis points to 3.54 per cent on Wednesday, falling for the eighth day as central banks offered cash to revive lending, Bloomberg financial news service reported.

But the Libor was still higher than the US central bank's target rate for overnight loans of 1.5 per cent.

There was some good news from US telecoms giant AT&T, Philip Morris tobacco company and the fast food chain McDonald's.

Although AT&T rode demand for the Apple iPhone to increased profits, it was less than analysts had expected - only a 6 per cent gain to $3.2 billion.

Philip Morris, maker of Marlboro cigarettes, did good business in Eastern Europe and emerging economies, boosting earnings to $2.1 billion, a 20-per cent climb from the same period in 2007, the company said on Wednesday.

McDonald's, the world's largest restaurant company, reported an 11-per cent rise in third quarter profits to $1.19 billion, boosted by consumers seeking cheaper food on the dollar menu of the Golden Arches. Europe outpaced US demand for McDonald's products, the company said on Wednesday.