Disappointing earnings from Morgan Stanley touched off a round of profit-taking, pushing Wall Street sharply lower, while gold and technology shares dragged down Bay Street on Wednesday morning.

At midday, Toronto’s S&P/TSX composite was down 37 points or 0.43% to 8605.93, while the TSX Venture exchange was up 2.64 or 0.17% to 1532.76. In New York, prices were down sharply: the Dow Jones industrial was off 116.06 points or 1.13% to 10128.87; the Nasdaq had fallen 28.9 points or 1.5% to 1892.28 and the S&P 500 tumbled 13.73 points or 1.22% to 1115.57.

The Canadian dollar was up 0.20 of a cent to US77.94¢.

In Toronto, only the metals and mining sector, led by a 1.1% gain in Inc shares, and the telecommunications services group were up.

But gold shares were off 0.56%, with losses in Placer Dome and Barrick Gold leading the way. Energy stocks were off as well, down 0.83% despite another jump in the price of a barrel of oil. Technology stocks were down 1.5%, led by Nortel Networks (off 1.28%) and Sierra Wireless (off 2.9%). Financial issues were off 0.07%.

In New York, Morgan Stanley’s earnings widely missed Wall Street expectations due to a sharp drop in trading commissions. Morgan Stanley posted a 34% drop in third-quarter profits, missing Wall Street forecasts by US17¢ per share. Morgan Stanley was down $2.93 to US$49.45.

The news affected other brokerage stocks, with Goldman Sachs falling $1.47 to US$93.43 and Lehman Brothers losing 44¢ to US$79.31. Bear Stearns Cos. Inc. dropped $1.97 to US$88.12 as profits declined by 10% from a year ago, but managed to beat analysts’ expectations by 11 cents per share.

Oil prices once again moved higher, creating fresh worries that high energy costs would further curtail consumer spending, especially as the winter heating oil season arrives. A barrel of light crude was quoted at US$47.35, up 59¢, on the New York Mercantile Exchange. Prices had topped US$47 per barrel earlier in the session.

Also on Wall Street: fast-food chain Wendy’s International Inc., owner of the Wendy’s burger chain and Tim Hortons coffee shops, slid $1.70 to US$33.80 after the company cut its 2004 profit forecast due to hurricane damages and a resulting drop in business in Florida, along with high beef prices; Eastman Kodak Co. reiterated its previous 2004 earnings guidance, citing strong sales of digital cameras and digital imagery for businesses. Kodak was up 40¢ at $32.07; news that Interstate Bakeries Corp., makers of Wonder Bread and Hostess snacks, was filing for bankruptcy sent the stock plummeting US$1.22, or 37%, to US$2.05.

Overseas, Tokyo’s Nikkei Stock Average of 225 issues shed 61.46 points, or 0.55% to 11,019.41. Hong Kong’s Hang Seng Index dropped 32.25 points, or 0.24% to 13,272.23.

London’s FTSE 100 index edged nine points lower at 4,599.4. Frankfurt’s DAX 30 dipped 1.17% while the Paris CAC 40 shrank 1%.