News of the reports and continuing fears of a recession sent the Dow Jones Industrial Average down more than 500 points to close at 8,519 on Wednesday.
Meanwhile, world leaders are set to gather in the Washington area on Nov. 15 to discuss the global economic crisis, the White House announced. The Group of 20 nations will review current measures to address the crisis, its causes and work to reach an understanding on regulatory and institutional reforms for global financial sectors.
G-20 members are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.
Wachovia, which is being bought by Wells Fargo for about $14 billion in stock, said it lost $23.89 billion in the third quarter. It earned about $1.62 billion in the same quarter a year ago, according to the Associated Press.
Drugmaker Merck said it will cut 7,200 jobs as part of a new restructuring program. The company’s third-quarter profit dropped 28 percent partly due to flat sales.
In the tech world, Yahoo also said it would reduce 1,500 jobs while it braces for a downturn, the AP reported.
And airplane manufacturer Boeing Co. reported its earnings fell 38 percent as a strike halted production of commercial jets.
“Clearly, we’re going to have a number of difficult months ahead of us in terms of the real economy,” said Treasury Secretary Henry Paulson on “The Charlie Rose Show.”
Last week, Paulson announced the administration would spend $250 billion to buy stakes in U.S. banks. And the Federal Reserve said Tuesday that it would provide up to $540 billion in loans to help the money market mutual fund industry.
In other government actions to deal with the financial crisis, the Treasury Department said it has chosen two major accounting firms to help manage the government’s $700 billion financial-system rescue plan approved by Congress on Oct. 3.
Paulson said that banks might use part of the money they get from the government to make acquisitions of weaker banks.
“There will be some situations where it is best for the economy and for the banking system for there to be a consolidation,” he said, according to the AP.
Meanwhile, Congress has started holding hearings on possibly revamping the regulatory system in what could become the most sweeping changes to the financial system since the 1930s following the stock market crash of 1929.
Democrats in Congress also are pressing for a second economic stimulus program that could top $150 billion or more, reported the AP.