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Stocks Plunge on Earnings Woes, Spain Worries

The weakest sectors in the broad market, which was down across the board, were energy, basic materials, conglomerates, financials, and energy.

"On the surface, Q3 earnings appear to be coming in at or above expected levels, but much of that outperformance has come from the financials and a handful of large cap companies," said Mike PeQueen, managing director at HighTower. "Technology has generally reported weaker than expected results which bolsters the global slowdown story."

"Below the surface, we see continued angst over the upcoming fiscal cliff and the slowdown in China. It is also clear that guidance for Q4 is more negative than we had anticipated which is causing us to remain cautious on the market outlook for the remainder of the year. We now expect earnings estimates to trend down over the next several weeks."

According to Thomson Reuters data, the blended estimate for the third quarter, which reflects reported results and analyst expectations, is now forecasting a year-over-year earnings decline of 2.4% for the S&P 500, down from growth of 8.4% in the second quarter. 25% of S&P 500 companies have reported so far.

The FTSE in London finished down 1.44% and the DAX in Germany fell 2.11%. The Nikkei Average in Tokyo finished up 0.04%. The Hong Kong markets were closed for a public holiday.

December crude oil futures shed $1.98 to settle at $86.67 a barrel, while December gold futures plunged $16.90 to settle at $1,709.40 an ounce.

The benchmark 10-year Treasury advanced 16/32, diluting the yield to 1.762%. The dollar rose 0.47%, according to the dollar index.

In other corporate news, Facebook (FB - Get Report) shares closed up 0.87% ahead of the social networking giant's third-quarter report. After the close, the company posted adjusted earnings of 12 cents a share on revenue of $1.26 billion, topping the average estimate of analysts polled by Thomson Reuters for a profit of 11 cents a share on revenue of $1.22 billion. Shares spiked more than 6% higher in extended trades.

Shares of Netflix (NFLX - Get Report) were getting crushed in late trades after the streaming content and DVD rental company said it expects to increase its U.S. streaming subscriber base to a range of 26.4 million to 27.1 million in the fourth quarter, implying potential growth of 5.2-8% from its current base of 25.1 million, which came in at the low end of its outlook of 24.9 million to 25.7 million.

"While we are not growing membership as fast as in 2010, we think that over time nearly all U.S. households will be broadband households, nearly all video will be Internet video, and that as our content and member experience continue to improve faster than competitors, our long-term domestic market opportunity remains 2-3x that of linear HBO," said the company, whose stock was down more than 15% in late trades.

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