Updated from 4:09 p.m. EDT

Stocks plunged Wednesday afternoon, with the Nasdaq hitting a new low for 2004, as skepticism about the pace of earnings growth for the rest of the year overshadowed good news in the present, despite an initial charge from Fed Chairman Alan Greenspan's upbeat congressional testimony and Microsoft's ( MSFT) plan to return $75 billion to shareholders.

The tech-heavy Nasdaq set a new low for the year, down 42.70, or 2.23%, to 1874.37. It was weighed down by a 3.7% drop in the Philadelphia Semiconductor Index. The Nasdaq's previous low was 1876, set in mid-May.

The Dow Jones Industrial Average dropped to its lowest close since mid-May, down 102.94 points, or 1.01%, to 10,046.13, after being as high as 10,237 in the morning. All but four of the 30 components of the index were in the red, with the only support coming from Microsoft, United Technologies ( UTX), Honeywell ( HON) and J.P. Morgan ( JPM).

Meanwhile, the S&P 500 also took out its recent lows and fell below its 1100 mark for the first time since May, down 14.79 points, or 1.33%, to 1093.88.

In other markets, the 10-year Treasury note was down 6/32 to yield 4.47%, while the dollar climbed against the yen and the euro. In New York, crude oil for August delivery was down a penny to $40.57.

"Anytime you close below an annual low on big volume, it's a big disappointment, and I would think that suggests that we've got some more work to do on the downside," said Joe DeMarco, head trader with HSBC Management. "There doesn't seem to be any specific catalyst except for the market's inability to respond well to good earnings and good guidance. We seemed to brush that stuff off, so that means there's concern about the fact that earnings growth is decelerating."