It’s adding up to be a pretty bad day for markets as new orders for durable goods tumbled, demand for mortgage applications shrunk, the Chinese stock market dropped precipitously, crude oil continues to weaken, and earnings were soft all around.

Three hours into the Wednesday session, the S&P 500 has shed 0.46% to 974, the Nasdaq has fallen 0.42% to 1967, and the Dow is trading 0.34% lower at 9065.

Orders for durable goods fell by 2.5% in the month, which in percentage terms is five times worse than analysts’ expectations. The biggest drop in five months was led by a 13% decline in the transportation sector, as orders for commercial planes slid 38.5% due to production problems at Boeing. The only good news was that when transportation is excluded, new orders actually increased 1.1% in the month ― the largest increase in four months. 

The volume of mortgage applications fell 6.3% last week, following a 2.8% advance in the week before, as mortgage rates once again ticked higher. The Mortgage Bankers Association said average rates for a 30-year mortgage have moved up from 5.05% to 5.36% in the past two weeks, which caused demand to shrink for the first time in four weeks.

China’s Shanghai Composite Index fell 5% on Wednesday, its biggest percentage drop since mid-November. The slide was initiated by concerns that the government would tighten credit markets sooner than expected.

Crude oil futures are down another $1.77 to $65.46, subtracting from the one-dollar drop on Tuesday.

NY Fed President William Dudley predicts the economic recovery will be much slower compared to previous recessions, as credit will be limited, employment will remain high, and households will still be adjusting to their lowered net worth. "If the recovery does, in fact, turn out to be lackluster, the unemployment rate is likely to remain elevated and capacity utilization rates unusually low for some time to come," he said. The good news: inflation will be tame.

The world’s largest steel maker, ArcelorMittal, reported Q2 earnings below analyst’s expectations, and its outlook for the current quarter was dim.

The fifth largest private sector energy corporation in the world, ConocoPhillips, reported a 76% dip in earnings in Q2. The Houston-based company posted net income of $1.3 billion, or 87 cents a share, compared $5.4 billion, or $3.50 a share, in Q2 2008.

Health-insurer WellPoint said profits slide by 7.6% in Q2, a less steep decline than expected. 

Media giant Time Warner said Q2 profit fell 34%, which was also better than expected. Moreover, the company is confident looking ahead.