Equities remained sharply lower as minutes from the Federal Reserve's last formal meeting revealed rate cuts were put on the table at the mid-September gathering, and after Fed Chairman Ben Bernanke in a speech opened the door for a possible interest-rate cut soon.

"Despite its scale, the Federal Reserve's massive injection of financial liquidity of late and its announcement of a new facility that will purchase commercial paper is not registering with investors who appear to be clamoring for interest rate cuts instead," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co.

The Fed step initially propelled the Dow Jones Industrial Average back above the 10,000 level, breached on Monday for the first time since October 2004.

But the blue-chip index spent the bulk of the session mired in triple-digit losses and ended down 508.39 points, or 5.1 percent, at 9,447.11.

The Dow is now 1,400 points lower than where it stood at last Tuesday's close.

Shares of Alcoa Inc. closed 7.7 percent lower. After the close, the aluminum giant reported third-quarter net income of 33 cents a share versus 63 cents for the year-ago quarter.

"We have a 'sell-on-any news' mentality. And, how aggressive are you going to be ahead of earnings season?" said Peter Bookvar, equity strategist at Miller Tabak.

Bookvar believes the move by the Fed and other central banks will give the equities market a decent bounce through the end of the year, as the market gives the Fed actions the benefit of the doubt. As he put it, "It's going to be raining money for the next couple of months."

But Bookvar says he is a long-term bear for what he calls the obvious reasons: "The systemic financial collapse risk is almost over, but phase two of the unwind is a nasty economic and earnings recession."

Of the Dow's 30 components, all posted losses, with the Dow's biggest laggard proving to be Bank of America Corp., down 26.2 percent after reporting a 68 percent profit fall, slashing its dividend and saying it will raise up to $10 billion in common stock.

The S&P 500 lost 60.66 points, or 5.7 percent, to 996.23, with financial and consumer discretionary shares fronting sector losses that by late afternoon stretched to include all 10 of the S&P's industry groups.

Among the financial-sector stocks weighing most heavily on the S&P, General Growth Properties Inc. fell 41.9 percent.