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Stocks Fall Sharply, Fear Gauge Soars

Stocks fell sharply at the open Wednesday after the latest bevy of big names reporting earnings issued gloomy outlooks or missed their targets altogether.

The Dow Jones Industrial Average fell more than 200 points, or 2 percent, in the first two minutes of trading. The S&P 500 was also down more than 2 percent, while the Nasdaq lost more than 1 percent.

The CBOE volatility index, widely considered the best gauge of fear in the market, shot up 40 percent, topping the 70 mark.

Recent lows could be tested on the major indexes, Ben Lichtenstein, president from tradersaudio.com, told CNBC. The sheer amount of government intervention is leading some investors to fret about the bleakness of the economic picture, he said.

Markets in Europe and Asia slid sharply as they were also hurt by worries of a recession, as well as falling commodity prices.

Adding to the gloomy outlook, Treasury Undersecretary David McCormick said the next few quarters would continue to be challenging, but the economy could start to recover late next year.

"Halloween is coming next week and everyone is afraid of the boogeyman … it's fear and rumors and hysteria, but I think for people with a steady hand and a cool head there's tremendous opportunities," Bill Spiropoulos, CEO of CoreStates Capital Advisors, told CNBC.

Stocks have been so volatile in recent weeks that a negative open can be turned around by the close. Today's session could "turn the tide and go black," Spiropoulos said.

Boeing badly missed expectations with a 96-cent per-share loss against expectations of a 98-cent profit; AT&T missed with earnings of 67 cents a share, below the estimate of 71 cents a share; and Merck beat expectations by a penny with an 80-cent per-share profit but still fell by about 2 percent premarket.

>>Click here to see a roundup of today's earnings.

Wachovia reported a $4.8 billion loss, or $2.23 a share, against analyst expectations of a 2 cent per share profit. The number excludes impairment and expenses; the total loss was $23.9 billion, or $11.19 a share.

But the company said the losses were in line with its own expectations, and shares rebounded to unchanged after dropping 3 percent in premarket trading.

McDonald's beat expectations, helped by a 7.1-percent increase in global sales.

Apple . reported after the bell Tuesday that its profit rose 26 percent, helped by iPod sales though the tech giant tempered its outlook.

Correction:
AT&T posted a profit of 67 cents a share. An earlier version of this story mistakenly said that AT&T reported a loss of 67 cents a share.