Wall Street extended its sharp drop in early trading Monday as investors pulled away from stocks amid worries about the credit and housing markets and disappointing corporate earnings.

The market remained uneasy although several companies including drug maker Merck & Co. and toymaker Hasbro Inc. reported decent third- quarter results. Investors were still mindful of the disappointing profit outlooks from some blue chip companies and Standard & Poor’s downgrade of another series of mortgage-backed securities; those developments sent stocks plunging Friday, taking the Dow Jones industrials down 366 points.

Over the weekend, the world’s economic leaders not only said that calming the turbulent global financial markets will require vigilance, but they also warned of inflation risks—which puts central banks like the U.S. Federal Reserve in a tight spot. The Fed lowered interest rates on Sept. 18 to make borrowing cheaper amid a growing credit market crisis, and Wall Street hopes policy makers reduce rates again when they meet next week. [MORE]