Wednesday's Summary....

U.S. Markets

Dow -293.00 (-2.36%)
Nasdaq -58.30 (-2.57%)
S&P 500 -32.32 (-2.43%)

News That Moved the Market

Oil, Gold, and Stocks All Lose Ground. Stocks traded higher briefly in the morning, after Morgan Stanley (MS, +1.4%) reported better than expected earnings. The bank took a $2.3 billion writedown connected to subprime and housing issues, but added it had one of its best quarterly trading performances in the history of the firm. Major indices declined however, as investors noticed a sharp sell-off in commodities. Crude fell 4.5%, after the weekly inventories report showed an increase in stockpiles, while gold dropped 6.5%. Some experts blamed today's actions on hedge funds being forced to sell positions in order to de-leverage or meet margin calls. It was yet another reminder of how much influence hedge funds have attained in the last couple years, and how much they can move markets.

Record IPO for Visa. Visa (V, +28.4%) attracted a massive amount of bids and easily became the largest IPO in U.S. history. The stock opened at $44/share, pushing the total proceeds from the offering to more than $17.5 billion.

Capital Requirement Reductions Boost Fannie and Freddie. The Office of Federal Housing Enterprise Oversight will relax its capital requirements for Fannie Mac (FNM, +8.8%) and Freddie Mac (FRE, +14.9%), a move that might lead to the immediate injection of $200 billion in the mortgage-backed securities market. Both companies will now be able to do more business and help turnaround the housing market.

More Writedowns At Merrill? News that Merrill Lynch (MER, -8.6%) is suing XL Capital Assurance over default protection on $3 billion worth of CDOs concerned investors at the end of the day, pushing markets to finish at their worst levels of the day. "We filed suit to make clear that XL Capital Assurance Inc. is required to meet its contractual obligations," Mark Herr, a spokesman for Merrill, said. So far, MER has taken $24.5 billion worth of writedowns, which is the most of any of the major banks.

Quick Tics:

Nike (NKE, +0.3% day: +3.7% A.H.) reported a 32% increase in profits after the bell…

Apple (AAPL, -2.4%) is considering giving free access to iTunes to customers in exchange for paying more for an iPod or iPhone.

Tomorrow Notable Earnings:

FedEx (FDX) Time Not Supplied

Economic Events:

8:30 AM: Jobless Claims
10:00 AM: Leading Indicators
10:00 AM: Philadelphia Fed