NEW YORK — An increasingly despondent Wall Street fell for the third straight session Wednesday as investors absorbed another series of dismal corporate reports and news that the government won't buy banks' soured mortgage assets after all.

The Dow Jones industrials dropped more than 410 points, and all the major indexes lost more than 4 percent.

The stock market has lost about $1 trillion over the past three days, according to the Dow Jones Wilshire 5000 index, which reflects the value of nearly all U.S. stocks.

The market started the day falling on more signs that companies, including Macy's Inc and Best Buy, are being hurt by a severe pullback in consumer spending. Macy's, for instance, said it lost $44 million in the third quarter as sales at the retailer fell more than 7 percent.

The bleak reports, which followed disappointing news from coffee retailer Starbucks earlier in the week, made it increasingly clear that companies across the economy are suffering from the aftermath of the housing and credit crises.

"There just doesn't appear to be an end in sight to the bad news," said Anton Schutz, portfolio manager of the Burnham Financial Industries Fund and the Burnham Financial Services Fund. "The selling is relentless."

There was more pain at mid-morning, when Treasury Secretary Henry Paulson said the government's $700 billion financial rescue package won't purchase troubled assets from banks.

Treasury instead will rely on buying stakes in banks and encourage them to resume more normal lending.

Though Paulson's announcement marks a major shift in the original bailout plan and rattled investors, Wall Street analysts generally believe the Treasury is now on the right path.

The selling accelerated in the last hour of the day, as it has done in most sessions over the past two months.

"When there is a lot of volatility, especially on a big down day, people just decide they don't want to own stocks overnight," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "News doesn't drive this lower. Fear does. Investors will back the next morning after they see where things settled."

Late-day volatility has also been fed by hedge and mutual funds selling as investors withdraw money from the market.

The Dow shed 411.30, or 4.73 percent, to 8,282.66. It was the lowest close for the Dow since its 5-1/2-year low of 8,175.77 on Oct. 27. The broader Standard & Poor's 500 index dropped 46.65, or 5.19 percent, and the Nasdaq composite index stumbled 81.69, or 5.17 percent.