Updated from 2:51 p.m. EDT

In a show of ongoing high volatility, stocks on Wall Street turned sharply downward to close with heavy losses Tuesday, as traders picked through a large, lackluster pile of

corporate earnings

statements.

The

Dow Jones Industrial Average

dropped 231.77 points, or 2.5%, to 9033.66, and the

S&P 500

gave back 30.35 points, or 3.1%, to 955.05. The

Nasdaq

lost 73.35 points, or 4.1%, at 1696.68.

"Wall Street is up to its eyeballs in earnings reports," said Fred Dickson, director of client research and chief market strategist at DA Davidson. He said investors are trying to figure out whether earnings estimates for the current quarter are too high and how much they may have to be reduced.

Dickson said the market is experiencing a normal pullback from Monday's substantial rally, which was spurred by

Federal Reserve

Chairman Ben Bernanke's endorsement of an economic stimulus package. Dickson said that from here he expects the market to be range-bound, with the Dow trading between 7500 and 9500.

"We're taking a wait-and-see approach before we say the bear market hit its bottom on Oct. 10," said Dickson.

After the close of Monday's session, credit card firm

American Express

(AXP) - Get Report

reported earnings that fell year over year but still beat analysts' expectations. The stock rose 8.4% Tuesday to close at $26.39.

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Elsewhere in the financials, business wasn't looking as good. Regional banks

Fifth Third

(FITB) - Get Report

,

National City

(NCC)

and

KeyCorp

(KEY) - Get Report

all announced losses stemming from bad loans. National City said it plans to cut 4,000 jobs.

US Bancorp

(USB) - Get Report

said its income fell from a year ago.

Fifth Third ticked up 0.2% to $12.25, National City added 2.4% to $2.99, KeyCorp jumped 12% to $10.95 and USBancorp slipped 3% to $30.20.

Large bank

Citigroup

(C) - Get Report

was also in for a hard time following a Goldman Sachs analyst statement that said the firm may not report a profit for the next 12 months and reiterated a sell rating on the stock. Shares stumbled 6% to $14.18.

Bank of America

(BAC) - Get Report

had bad news as well. The company's credit card business lost $373 million on borrower defaults. BofA shares skidded 1.8% to $23.97.

Tuesday also marked the deadline for settlement of $400 billion worth of

credit default swaps

on bankrupt brokerage

Lehman Brothers'

debt.

The Fed announced that it would buy commercial paper from money-market mutual funds in another effort to massage cramped credit markets.

Abroad, Canada's central bank lowered its target interest rate 25 basis points to 2.25%, and France announced plans for a $14 billion capital injection into its largest banks.

The cost of borrowing among banks was once again declining, as three-month dollar Libor declined to 3.83% from 4.06%. The overnight rate slipped to 1.28% from 1.51%.

Many other companies' quarterly results were discouraging.

Texas Instruments

(TXN) - Get Report

said it foresaw weak sales in the next six months and said it plans to sell its cell-phone chip business. Shares shed 6.3% to $16.85.

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Big technology names

Yahoo!

(YHOO)

and

Apple

(AAPL) - Get Report

were set to report after the close. Ahead of their reports, Yahoo! lost 6.1% to $12.07, and Apple lost 7.1% to $91.49.

Equipment manufacturer

Caterpillar

(CAT) - Get Report

reported a decline in profit as the cost of raw materials rose. It stumbled 5.1% to $38.83. Chemical firm

DuPont

(DD) - Get Report

reported third-quarter earnings that fell from a year earlier because of hurricane-related charges. DuPont slipped 8% to $33.28.

Defense company

Lockheed Martin

(LMT) - Get Report

also saw earnings improvement, although its forward guidance was lower than analysts had expected, and its shares tumbled 9.7% to $84.19.

Not all was dismal among industrial firms, however. Conglomerate

3M

(MMM) - Get Report

announced improved earnings thanks to strong international sales, sending shares up 4.4% to $60.04.

As for the automakers,

The Wall Street Journal

reported that

Chrysler

might partner with

Nissan

(NSANY)

and

Renault

for purposes of manufacturing and development. Nissan slipped 2.2% to $10.44. The

Journal

said that Chrysler would still prefer to merge with

General Motors

(GM) - Get Report

. GM ticked up 0.2% to $6.54.

Ford

(F) - Get Report

was also looking troubled after billionaire investor

Kirk Kerkorian

, whose

Tracinda Corp.

is the largest Ford shareholder barring Ford family members, sold about $17.7 million of his stake in the company to focus on opportunities in gaming, hospitality and oil and gas. Ford shares gave back 6.9% to $2.17.

Looking at commodities, crude oil declined $3.36 to close at $70.89 a barrel, and gold was down $22 to settle at $768 an ounce.

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"I think once again the market is back to focusing on weakening demand," said Phil Flynn, vice president and senior market analyst at Alaron Trading. He said that the market has previously overestimated demand and is now pricing in a prolonged slowdown in the economy.

"We may see demand start to come back up but in terms of prices being able to take off again, it's going to take maybe a couple years," said Flynn.

Longer-dated U.S. Treasury securities were rising in price. The 10-year was up 30/32 to yield 3.73%, and the 30-year was gaining 27/32, yielding 4.21%. The dollar was gaining on the euro and pound but shrinking vs. the yen.

Overseas, European exchanges such as the FTSE in London and the DAX in Frankfurt were trading lower. As for

Asian markets

, Japan's Nikkei closed on the upside, while Hong Kong's Hang Seng finished with losses.