The Dow Jones industrial average was off 151.26 points, or 1.6 percent, 9,232.97, and the Nasdaq composite index fell 75.73, or around 4 percent, to 1,646.34. CNET's technology indexes were mixed.
Technology stocks initially moved higher on earnings reports from IBM, Intel and AOL Time Warner. But those gains dwindled after House Speaker Dennis Hastert said House members had to make sure their offices were "environmentally safe" after staffers in the offices of Senate Majority Leader Tom Daschle and Sen. Russell Feingold have tested positive for exposure to anthrax.
Federal Reserve Chairman Alan Greenspan's address to a joint congressional committee on Capitol Hill Wednesday didn't do much to inspire the markets. Greenspan said the state of the economy was still uncertain following the Sept. 11 attacks, but added that the U.S. financial markets may have built in some expectation of further attacks.
"There is a discounting, an expectation that we will have other events occurring," Greenspan said. The chairman said though it's impossible to tell how much the markets have gone down in anticipation of more attacks, there is some cushion should the nation suffer from more terrorist activity.
Some economic news indicates the housing market has been resilient despite the deteriorating economy, though new building permits have started to slow. The Census Bureau of the Department of Commerce said housing starts, which measure the number of residential units on which construction is begun each month, rose in September to a seasonally adjusted rate of 1.574 million units, a 1.7 percent increase from August's rate.
But the rate of permits being issued, an indicator of builder confidence in the future of the economy, fell 3 percent in September, the lowest since December 1997.
Though developments in Washington, D.C., overshadowed tech earnings, shares for companies reporting good results rose sharply.
IBM was up $1.05 at $102.90 after it posted earnings Tuesday evening that topped forecasts.
Intel was the Nasdaq's most actively traded stock, off 40 cents at $24.56, after the chipmaker met consensus estimates Tuesday evening. Shares had gained earlier on the news.
Among other shares sliding after quarterly reports, EMC tumbled $2.24, or 17 percent, to $11.21. The maker of data-storage systems said Wednesday it has lost money for the first quarter in a dozen years as it took an $825 million restructuring charge. EMC also warned it did not expect to turn a profit until the second half of next year.
i2 Technologies was off $1.40, or 25 percent, to $4.29. The business-to-business software company posted a $5.53 billion third-quarter net loss after taking a massive write-off on an acquisition. It also said it would cut around 20 percent of its work force.
AOL Time Warner fell $2.69, or 8 percent, to $30.81 after the media giant beat Wall Street's estimates, but only after it lowered expectations because of the slowing economy and advertising market.
Among other actively traded shares, Oracle fell $1.28 at $13.66, Microsoft fell $2.42 at $56.03, and Cisco Systems lost $1.37 at $15.60.
Yahoo lost $1.14 at $11.36, and Amazon.com was off 64 cents at $8.92.
Staff and Reuters contributed to this report.