Stocks fell sharply Wednesday as worries about more credit losses in the banking sector and the earnings season overall took a toll on stocks.

The Dow Jones Industrial Average lost 248.42, or 2.9 percent, to close at 8,200.14, bringing its losing streak to six sessions and its loss in that time to a whopping 10 percent.

The S&P 500and Nasdaq lost 3.3 percent and 3.7 percent, respectively, after posting gains in the prior session, as volatility and uncertainty remained. Investors are worried about earnings, questions surrounding the status of Treasury Secretary nominee Timothy Geithner's former housekeeper and the incoming Obama administration.

Indeed, the CBOE volatility index, or VIX, jumped about 14 percent, ending just shy of 50.

Volume was light: About 1.42 billion shares changed hands on the New York Stock Exchange, well below last year's daily average of roughly 1.9 billion.

The Dow and the S&P are actually having their worst opening to a new year ever: The Dow is down 6.6 percent since the ball dropped; the S&P is off 6.7 percent.

Financials led today's decline amid worries about more fallout in the sector.

Citigroup shares fell 23 percent to close at $4.53, well below $5, a critical mark where some institutional investors may choose to dump the stock. Analysts have speculated that the company's decision to shed its Smith Barney brokerage unit was the precursor to a complete breakup of the company and that it's going to need a lot more capital.

"You'd think the news on banks is baked in, but there's still a lot of headwinds," Rich Parker, head of trading at Stanford Group, told Reuters.

Plus, Parker said, the write-downs are "starting to really scare people outside of the banking area as well."

Meanwhile, Citigroup, like JPMorgan , bumped up its earnings and now plans to report on Friday. JPMorgan reports Thursday, a week ahead of schedule. JPMorgan shed 1.7 percent.

Bank of America lost 4.2 percent after analyst Richard Bove of Ladenburg Thalman cut both his 2008 and 2009 forecasts for the bank, saying it faced large losses from higher net charge-offs, loan reserves and trading losses.

>> See how all 30 Dow stocks fared today.

American depositary shares of HSBC dropped 8 percent amid worries that Europe's biggest bank may have to raise $30 billion in capital. For the year, the company said it expected to post a loss of 3.9 billion euros, or $5.14 billion.

And Deutsche Bank ADRs tumbled 9.2 percent after the bank said it expects to post a $6.4 billion quarterly loss because of weakness in its credit rating and other issues.

Crude oil dropped 50 cents to settle at $37.28 a barrel after a report showed crude inventories grew by 1.2 million barrels last week. Chevron shed 3 percent, while ExxonMobil lost 3.6 percent.

Upscale jeweler Tiffany reported its same-store sales fell 24 percentthis holiday season and warned that the softness would take a toll on its fourth-quarter earnings. The company also issued a full-year profit warning.

And, it's official: This was one of the worst holiday seasons on record for retailers. The National Retail Federation estimated retail sales dropped 2.8 percent this holiday season, the first decline since the group started tracking sales in 1995, while the official government number showed retail sales dropped by 2.7 percent in December, much larger than the 1.4-percent decline expected.

The morning was also dotted with a trio of banruptcy filings: west coast department-store chain Gottschalks, family-apparel chain Goody's and telephone-equipment maker Nortel Networks .

In other economic news: Import and export prices fell for a fifth straight monthin December as costs for oil and even many nonpetroleum products declined. However, the decline was smaller than expected. And business inventories shrunk more than expected in November, suggesting that businesses are liquidating supplies to better match demand, though falling prices have also dented the value of inventories. (The inventories numbers aren't inflation-adjusted.)

The economic picture has darkenedover the past few months, the Federal Reserve reported in its beige-book report of economic conditions from around the nation.

Numerous criminal cases were dominating the financial landscape: UBS banker Raoul Weil formally declared a fugitive by the U.S. and investment manager-turned-fugitive Marcus Schrenker was found, while Bernard Madoff was allowed to remain free on bail.

The world’s biggest listed hedge fund, Man Group, will take legal action with its investors over exposure to the alleged fraud by U.S. financier Bernard Madoff, Chief Executive Peter Clarke told Reuters in an interview.

Still to Come:

THURSDAY: ECB announcement; PPI; weekly jobless claims; Philadelphia, NY Fed surveys; Earnings from JPMorgan, Genentech, Intel

FRIDAY: CPI; industrial output; consumer sentiment; Fed's Lacker speaks; Earnings from Citigroup

ALL WEEK: Detroit Auto Show (Jan. 11-25)

