The Dow Jones Industrial Average had lost more than 130 points at midday, falling 0.99 percent to 13,540.31 after Merrill Lynch (NYSE: MER; TYO: 8675) said that it had written down $7.9 billion in the third quarter, over $2 billion more than it had said that it would have to write off earlier, for a net loss of $2.3 billion in the quarter.
In addition the National Association of Realtors said that existing home sales were down again in September, falling 8 percent during the month for the biggest decline since 1999 and much more than the 4.5 percent that had been expected.
The weak sales sent the median price for an existing home 4.2 percent lower than last year at the same time.
The Nasdaq Composite, meanwhile, was down 1.93 percent to 2,745.37 and the S&P 500 dropped 1.3 percent to 1,499.79.
In the technology sector Intel (NAS: INTC; SEHK: 4335) was $1.08 lower to $25.72 after Broadcom (NAS: BRCM) issued a worse than expected quarterly report Tuesday.
Broadcom was $7.51 lower to $34.55.
Banks took the Merrill Lynch news hard.
Bank of New York (NYSE: BNY) was $1.30 lower to $46.18, while Bear Stearns (NYSE: BSC) was down $4.13 to $112.04.
Internet retailer Amazon (NAS: AMZN) dropped $15.32 to $85.50 even though it reported that its profits in the quarter more than quadrupled.