Stocks fell across the board Wednesday after No. 1 chipmaker Intel and financial giant J.P. Morgan Chase tossed cold water on Wall Street investors' hopes for a quick recovery in corporate profits.

The Dow Jones industrial average fell 211.88 points, or 2.13 percent, to 9,712.27, while the Nasdaq composite tumbled 56.45 points, or 2.82 percent, to 1,944.46. The benchmark Standard & Poor's 500 shed 18.62 points, or 1.62 percent, to 1,127.57.

The close was the lowest for the Dow since Nov. 28. The last time the index fell more than 2 percent was Oct. 29, according to RiskMetrics Group.

"Intel knocked the wind out of the market today," said John Forelli, portfolio manager at Independence Investment LLC.

Intel, which said it was slashing capital spending 25 percent in 2002, weighed heavily on shares of semiconductor equipment makers and related companies such as computer makers, which are its main customers.

Wall Street drew little support from the latest economic data, which painted a tame picture for inflation but showed America's manufacturing sector is still struggling.

"What's becoming clear to everybody, is that the economy bottomed probably in November," said Edgar Peters, chief investment officer at PanAgora Asset Management. "But the recovery is not going to be very strong, and the market had already priced in a fairly strong recovery, so there's a bit of retrenchment going on."

Selling accelerated into the end of the session, sending the Nasdaq Composite down 56.47 points, or 2.82 percent, to 1,944.44 and erasing the market gauge's gain for the year.

Denting the Dow, diversified manufacturer Minnesota Mining & Manufacturing Co. fell $5.80 to $103.70 as investors worried it could be the next corporate giant to be slammed by burgeoning asbestos liabilities.

J.P. Morgan, another Dow stock, dropped $1.36 to $36.51. The No. 2 U.S. bank holding company reported a net quarterly loss of $332 million, hurt by bad loans, energy giant Enron Corp.'s bankruptcy, restructuring costs, and Argentina's economic woes.

Kmart Corp. saw its shares pummeled to a 36-year low after Standard & Poor's said it would cut the discount retailer from the S&P 500, and bankruptcy concerns mounted as the company remained silent following a meeting of its board of directors. Kmart's shares fell as low as $1.27, and ended down 85 cents, or 35 percent, at $1.60.

"The stock is trading on pure emotion," said Eric Beder, retail analyst at Ladenburg, Thalmann & Co. "They've needed to say something for weeks. If Kmart is not going to declare Chapter 11, they need to come out and forcefully say that."

AMR Corp. , parent of American Airlines, reported a record net loss of $798 million as revenues at the world's No. 1 air carrier dropped 22 percent on a weak economy and consumers' fear of flying after the Sept. 11 attacks. But its shares edged up 23 cents to $26.02 as investors apparently expected worse.

The market has begun to retrench since its blazing rally from three-year lows hit on Sept. 21 -- which has left the S&P 500 still up nearly 17 -- as investors begin to question whether stock prices are too expensive, given a murky profit outlook.

Intel, down 97 cents at $33.71, pressured both Nasdaq and the Dow and was the most actively traded Nasdaq stock. After Tuesday's close, the company reported sharply lower earnings because of weak demand for personal computers, but both profits and revenues topped forecasts. Intel said it does not yet see any signs of an economic recovery and forecast first-quarter sales would be flat or lower from the fourth quarter.

Intel's decision to cut capital spending by 25 percent in 2002 was more drastic than analysts expected. Makers of semiconductor equipment, like Applied Materials Inc., down $4.06 at $41.55, were hit by that news. Novellus Systems Inc. dropped $3.50 to $38.81 and KLA-Tencor Corp. fell $5.30 to $50.01.

In economic news, U.S. consumer prices fell in December a bit more than market expectations, while the core rate, excluding food and energy prices, rose slightly, matching forecasts.

In its anecdotal look at the U.S. economy, the "Beige Book" report, the Federal Reserve said the economy remained weak in early January but showed some scattered signs of improvement.

In a separate report, U.S. industrial output fell for a fifth straight month in December, capping the worst year since 1982 with a 0.1 percent decline, the Fed said. Businesses ran at only 74.4 percent of full capacity, down from 74.5 percent in November and the lowest level since April 1983.

Top computer memory chipmaker Samsung Electronics Co. Ltd. also cut its 2002 capital spending plans, sending a shudder through chip-related shares around the globe.

The Philadelphia semiconductor index tumbled 5.13 percent, further trimming gains made last year as Wall Street bet that the sector may be turning the corner.

"We keep getting pushed out in terms of revenue recovery," said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank Private Banking. "People expecting the first two quarters to pick up in terms of revenue growth are now probably looking at the second half of the year just in terms of the companies that have reported so far."

RF Micro Devices Inc. lost 96 cents to $17.25. RF Micro, which makes circuits for mobile telephones and other wireless systems, posted lower profits and forecast fourth-quarter earnings below Street estimates.

Juniper Networks Inc. also had bad news, posting a net loss as spending on equipment by Internet service providers and telecom carriers tightened, and the No. 2 maker of network routers forecast essentially flat revenues for the current quarter. It dropped $1 to $16.96.

The chairman of Teradyne Inc. said he doesn't see any "imminent upturn" in business as the world's largest maker of semiconductor test equipment burns through cash amid canceled orders, sending its shares down 9 percent. The stock fell $5 to $28.50.

Declining issues led advancers more than 3 to 2 on the New York Stock Exchange. Volume came to 1.45 billion shares, compared with 1.38 billion Tuesday.

The Russell 2000 index slid 8.58 to 476.42.

Overseas, Japan's Nikkei stock average lost 0.3 percent. In Europe, Germany's DAX index dropped 1.5 percent, Britain's FT-SE 100 fell 0.7 percent, and France's CAC-40 slipped 2.1 percent.

Reuters and the Associated Press contributed to this report.