NEW YORK ( TheStreet) -- Stocks slumped Wednesday after Apple's ( AAPL) surprise earnings miss pressured the Nasdaq and the Federal Reserve said economic growth is weakening.

Europe's progress on its debt talks was also a factor as investors grow increasingly impatient with the inability to key officials to come together on a recapitalization plan to bulwark the region's banks and help Greece steer clear of default.

The Dow Jones Industrial Average lost 72 points, or 0.6%, at 11,505. The S&P 500 slid 15 points, or 1.3%, to 1210, while the Nasdaq tumbled 53 points, or 2%, at 2604. The Nasdaq felt the brunt of the weakness in Apple, which was down 5.6% after its quarterly earnings fell short of Wall Street's consensus view because of light iPhone sales.

Investor sentiment has shown extreme sensitivity to news reports leaking updates on talks between eurozone officials. The latest headline came via Reuters, which said that talks on the rescue fund are "stuck." French President Nicolas Sarkozy reportedly said that France and Germany were at odds on how to increase the fund's size, fueling nervousness that the leaders might not be able to agree on a plan by their projected deadline of Oct. 23.

The release of the Federal Reserve's October beige book at 2 p.m., which coincided with the timing of the Reuters report, also helped push the market lower. The Fed took a cautious outlook on the economy and underscored the uncertainty that businesses face. The report was "friendlier" than anticipated but hurt stocks and helped bonds, wrote David Ader, strategist at CRT Capital in a research note.

Breadth within the Dow was negative with 26 of the index's 30 components moving lower, led by Alcoa ( AA), Bank of America ( BAC), Johnson& Johnson ( JNJ) and DuPont ( DD), all down more than 2%.

Travelers ( TRV) was the biggest gainer among the blue chips, rising nearly 6%, despite the insurance giant reporting earnings that fell short of Wall Street's profit expectations because of Hurricane Irene and Tropical Storm Lee. The company said the severe weather is providing a reason to allow for higher rates.

Intel ( INTC), which easily topped third-quarter profit expectations on Tuesday, was also a standout to the upside. Shares gained 3.6% to $24.24.

Earlier, global markets largely disregarded a late Tuesday downgrade of Spanish bonds by Moody's. London's FTSE gained 0.7%, and Germany's DAX added 0.6%. Japan's Nikkei Average finished ahead by 0.4%, and Hong Kong's Hang Seng advanced 1.3%.

In U.S. economic news, inflation pressure remained muted in September. Consumer prices rose 0.3% in September, in line with expectations, while the core rate, which excludes food and energy, inched 0.1% higher after rising 0.2% in August. Wall Street had expected core inflation to tick 0.2% higher.

Meanwhile housing starts jumped 15% in September, helped by a jump in apartment and condominium construction. However, building permits slipped by 0.5%, suggesting that construction may fall in the future.

In Wednesday's earnings news, Morgan Stanley ( MS) reported a third-quarter profit gain of $3.6 billion, or $1.14 a share, helped by an accounting gain of $3.3 billion. Revenue rose 46% to $9.89 billion, topping Wall Street's expectations for earnings of 30 cents a share on revenue of $7.42 billion. Shares edged up 0.06% to $16.64.

Dow component United Technologies ( UTX) reported third-quarter earnings of $1.47 a share, topping expectations by 2 cents. Revenue rose 8.7% to $14.8 billion, exceeding forecasts for sales of $14.55 billion. The company also hiked its full-year earnings outlook to $5.47 a share, from a prior range of $5.35 to $5.45 a share. The stock was down 1.2% to $73.26.

Shares of PNC Financial Services ( PNC) were up 0.2% to $51.33 on after the company beat analysts' estimates by six cents with earnings of $1.55 a share.

Bank of New York Mellon ( BK) matched analysts' profit projections with earnings of 53 cents a share. The stock lost 1.2% to $19.54.

"There is very little opportunity to produce returns by buying individual stocks that are moving on their own individual merits," said Real Money columnist Rev Shark in a Wednesday blog post.

"The dominance of the European headlines makes it very difficult to have much confidence in charts or fundamentals right now," he said, adding, "until we are less focused on Europe, trading will continue to be challenging."

The dollar index, a measure of the dollar's value against a basket of currencies, was about flat. The benchmark 10-year Treasury was up 5/32, diluting the yield to 2.162%. In commodity markets, gold for December delivery shed $4.40 to trade at $1,642.60 an ounce. The December crude oil contract lost $2.10, to trade at $86.37 a barrel.

-- Written by Melinda Peer and Chao Deng in New York.

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