The Fed said it would conduct two auctions next week where banks can bid for up to $40 billion in loans, money that they will have to bolster their own reserves. It marked the Fed's biggest concentrated effort to inject liquidity into the banking system since the Sept. 11, 2001, terrorist attacks.

The hope is that the extra funds will spur increased lending on the part of the banks and combat a serious credit crunch that has made loans harder to obtain for many businesses and consumers.

The Fed linked the new auction process to an announcement that it was extending a line of credit in dollars to the European Central Bank and the national bank of Switzerland so that those institutions could better deal with credit problems in Europe. The Fed said it was also coordinating with the central banks of England and Canada.

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NEW YORK (AP) — Wall Street closed only moderately higher in an erratic session Wednesday as investors remained unconvinced by a Federal Reserve plan to work with other central banks to alleviate the global credit crisis.

Investors erased a 272-point gain in the Dow Jones industrial average that followed the Fed's announcement of an agreement with the European Central Bank and the central banks of England, Canada and Switzerland to confront what it called elevated pressures in the credit markets.

But the Fed's latest salvo didn't appear to assuage Wall Street's concerns about the spike in bad debt that has caused the credit markets to tighten in recent months, nor did it sew up investors' concerns about the nation's economic health.

Bank and brokerage stocks were under pressure Wednesday as investors worried the institutions will take further writedowns after warnings from Bank of America Corp., Wachovia Corp. and PNC Financial Services Group Inc.

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ATLANTA (AP) — Merck & Co. is recalling about a million doses of a childhood vaccine, after testing showed a sterilization problem in a Pennsylvania factory.

The company is not aware of any harm to children who received the vaccine, known as Hib, which prevents meningitis and pneumonia. It is a three-dose shot recommended for all children under 5 and is usually given to infants starting at two months old.

The recall involves 10 lots of Hib vaccine and two lots of a combination vaccine for both Hib and hepatitis B, a Merck spokeswoman said.

She said the company did not find contamination in the vaccine itself, but in the plant where the vaccine is produced in West Point, Pa.

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CHARLOTTE, N.C. (AP) — More troubling news erupted from the financial services sector Wednesday as Wachovia, PNC and Bank of America warned of bigger-than-expected writedowns and hinted that fourth quarter results could be a disappointment.

Wachovia Corp. doubled its estimate of loan loss provisions to about $1 billion for the fourth quarter, while the chief executive of crosstown rival Bank of America Corp. pointed to higher writedowns and said he expects current credit market turbulence to extend into 2008.

A third major bank, PNC Financial Services Group Inc., said the money it will set aside to cover bad loans for the last three months of the year will be more than twice as large as in the third quarter.

The disclosures come as a number of the nations' banks have forecast increasing credit losses in the wake of last summer's subprime mortgage crisis.

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NEW YORK (AP) — Treasury prices plunged Wednesday after the Federal Reserve and other central banks announced an ambitious, coordinated program that investors hope will avert a year-end liquidity crisis.

The announcement soothed mounting investor anxieties that a dearth of funding in late month could further slow the economy. The news initially sparked sharp gains for stocks and sent Treasury prices lower, given that the prospect of more liquid markets lessened investors' need for Treasurys and other safe haven assets.

However, stocks were well off their highs and Treasurys regained some strength by the time the bond market closed.

The benchmark 10-year Treasury note fell 20/32 to 101 12/32 with a yield of 4.06 percent, up sharply from 3.97 percent late Tuesday.

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NEW YORK (AP) — Energy futures rose sharply Wednesday after the government reported unexpected declines in supplies of crude and heating oil last week and the Federal Reserve announced a plan to help banks weather the credit crisis.

Crude supplies fell 700,000 barrels during the week ended Dec. 7, according to a weekly inventory report from the Energy Department's Energy Information Administration. Analysts had expected a 100,000 barrel increase.

And supplies of distillates, which include heating oil and diesel fuel, fell 800,000 barrels; analysts had expected inventories to rise by 300,000 barrels.

The market appeared to be more focused on the overall crude and heating oil numbers. Some analysts were perplexed by the focus on heating oil, noting that supplies often fall this time of year.

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WASHINGTON (AP) — Student lender Sallie Mae on Wednesday slashed its profit forecast for the fourth quarter and all of 2008, as it hoards cash to offset bad loans and faces reduced federal subsidies.

The company also said it failed to renegotiate a buyout with an investor group that balked several months ago at its original $25 billion cash offer for Sallie, the nation's largest student lender. The investor group, led by private-equity firm J.C. Flowers & Co., "does not wish to pursue these opportunities," Sallie, formally known as SLM Corp., said in a press release.

Sallie's shares sank $3.45, or 10.8 percent, to close at $28.49 a share Wednesday. That is more than 50 percent below the original $60-per-share offer from the investor group, which also includes Bank of America Corp. and JPMorgan Chase & Co.

The investor group had no immediate comment.

The developments come at a stressful time for Sallie, which lost $344 million in the third quarter, and for the student loan industry in general.

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BOSTON (AP) — Biogen Idec Inc. said Wednesday it would remain an independent company after a search for a possible buyer failed to yield any definitive offers. The company's shares plunged nearly 28 percent.

The strategic review began Oct. 12 after Carl Icahn bought up shares of the biotechnology firm. That led to speculation that the activist billionaire investor could be preparing a buyout bid, or that he might seek to increase the value of his shares by encouraging a bid by a major pharmaceutical company.

But Biogen Idec said after markets closed Wednesday that its board had decided the firm "will continue on its present course as an independent company."

The stock plunged $20.93, or 27.6 percent, to $54.95 in after-hours trading after closing up 49 cents at $75.88.

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WASHINGTON (AP) — Americans have turned markedly gloomier about the economy in recent months, a shift that is reshaping a presidential campaign long dominated by the war in Iraq and national security concerns.

Higher prices for gasoline and home heating oil, stock market volatility and rising mortgage foreclosures all account for some of the pessimism, in the view of political pollsters. Significantly, they also cite the recent drop in real estate prices as a major worry for millions who have long viewed their homes as a source of retirement income.