11:30AM Market averages gained some ground on more cash support from the Fed.

U.S. stocks gained some ground in late morning trading on the back of a Fed Reserve's announcement related to the injection of more cash into the banking system. There were conflicting announcements concerning plans of repurchase agreement in which the Fed buys securities from dealers, who then deposit the money into commercial banks. Eventually, the Fed said it would buy $7 billion.

KKR Financial Holdings (KFN: chart) said it was selling $5.1 billion of residential mortgage loans, adding it will no longer invest in such assets. Company's shares plunged nearly 20% as it also got a downgrade from Lehman to equal-weight.

Countrywide Financial Corp. (CFC: chart), the biggest U.S. mortgage lender, fell 5.4% after Merrill Lynch downgraded the stoc, with the warning that the company may have to file for bankruptcy. Again in the sector, Arbor Realty Trust (ABR: chart) slipped 3% after it was downgraded by Lehman Brothers due to its broad exposure to mortgage backed securities.

Among other stocks driven by analyst comments, Fossil (FOSL: chart) jumped 6.8% after the fashion accessory retailer was upgraded by Piper Jaffray from market perform to out perform on higher sales of its watches.

In late morning trading, the Dow Jones was up 15.61, or 0.12%, at 13,044.53, after briefly trading below 13,000 for the first time since April 25. The S&P's 500 index was up 5.10, or 0.36%, at 1,431.64, and the Nasdaq was up 6.77, or 0.27 %, at 2,505.89. Bonds were little changed, with the yield on the benchmark 10-year Treasury note at 4.73%, the same as late Tuesday.


09:45AM Wall Street opened steeply lower amid fears about global credit crunch.

Wall Street plunged at opening Wednesday, with continuous fears about a global credit crunch stifling positive sentiment, generated by data which showed the slowest consumer price inflation growth in eight months. An announcement from the Fed Reserve that it is ready to inject more cash to the banking system if needed, failed to bring relief. The Dow Jones fell below 13,000.

Shares of Countrywide Financial Corp. (CFC: chart), the biggest U.S. mortgage lender, fell 2% after Merrill Lynch downgraded the stock. Among other stocks driven by analyst comments, drinks and snacks giant PepsiCo (PEP: chart) was downgraded to neutral from buy at Goldman Sachs, with the broker citing valuation. The stock added 1%. At the same time, the broker upgraded Molson Coors Brewing (TAP: chart) to buy, sending its stock up 1.3%.

Agricultural equipment maker Deer & Co.''s (DE: chart) said its Q3 earnings rose 23% o $537.2 million, or $2.37 a share, compared with $436 million, or $1.85 a share a year earlier. H.J. Heinz Co. (HNZ: chart) projected Q1 sales growth of about 9% and earnings per share of 62 cents to 63 cents, above analyst expectations. The stock rose 3.5%.

In early trading, the Dow Jones industrial average fell 49.91, or 0.38%, to 12,979.01, trading below 13,000 for the first time since April 25. The Standard & Poor''s 500 index was down 2.98, or 0.21%, at 1,423.56, and the Nasdaq composite index was down 4.43, or 0.18%, at 2,494.69. Bonds rose, with the yield on the benchmark 10-year Treasury note at 4.70% from 4.73% late Tuesday.


09:00AM U.S. stock futures indicated a lower opening, despite benign inflation data.

U.S. stock futures were indicating steeply lower opening on Wednesday, as growing concerns about the strength of the credit market offset upbeat economic data. The Commerce Department said that U.S. consumer prices rose only 0.1% in July on falling gasoline prices, marking the slowest inflation rate in eight month. The core consumer price index increased 0.2% for the second straight month.

In corporate news, Bank of America (BAC: chart) and Countrywide Financial (CFC: chart) refused to lend money when hedge funds use mortgages, collateralized debt obligations and subprime securities as collateral. Countrywide Financial slipped 7% in the pre-open after it was downgraded to sell from buy at Merrill Lynch. The broker cited concerns about liquidity in the mortgage sector.

On the earnings news front, Applied Materials (AMAT: chart) dropped 4% in pre-open trade after the low end of the chip equipment maker''s quarterly earning missed estimates. European food makers advanced after Nestle (NSRGY: chart) posted an 18% profit rise, raised its earnings forecast and announced a $21 billion stock buyback.

S&P 500 futures fell 8.5 points at 1,425.80 and Nasdaq 100 futures dropped 13.75 points at 1,901.00. Futures on the Dow Jones Industrial Average dropped 74 points.


8:30AM New York, 8:30PM Hong Kong – Asian markets plunge on weakness in U.S. trading.