US stocks slump after Fed offers bleak outlook

US stocks extended losses on Wednesday after the Federal Reserve said the economy was losing steam across much of the nation, Xinhua reported.

The sell-off came after the release of Fed's so-called Beige Book, which is a summary of outlooks from the 12 district banks from across the country, showing business conditions became weaker in most areas of the nation.

"Many districts described the pace of growth as 'modest' or 'slight' and contacts generally noted weaker or less certain outlooks for business conditions," said the report.

Adding to the negative note, Moody's Investors Service downgraded Spain's credit rating by two notches from As2 to A1 late on Tuesday with a negative outlook, warning more downgrade risks in the future.

The technology sector was heavily weighed in most of the session after Apple Inc. unveiled a worse-than-expected earnings report, dragging the tech-heavy Nasdaq down over 2 per cent.

Among other companies reporting earnings Wednesday, Morgan Stanley was little changed after the bank posted a third quarter earnings of $2.15 billion on Wednesday, reversing a loss of $91 million in the same period last year.

As of Wednesday's close, the Dow Jones industrial average lost 72.43 points, or 0.63 per cent, to 11,504.62. The Standard & Poor's 500 was down 15.50 points, or 1.26 per cent, to 1,209.88. The Nasdaq Composite Index dropped 53.39 points, or 2.01 per cent, to 2, 604.04.