The most severe financial crisis in 80 years hit emerging markets hard on Wednesday, leading to emergency actions by central banks and calls for international assistance to prevent investors from pulling out. In the United States, there were disappointing earnings reports from companies like AT&T Inc and Boeing, as well as a decision by Merck & Co to cut 7,200 jobs. Wachovia Corp, a struggling US bank being acquired by Wells Fargo & Co, recorded a record $23.9 billion loss in the third quarter. Emerging market stocks, debt, and currencies all faced significant pressure as investors sold off assets due to concerns about the worsening global economy. Despite efforts by authorities around the world to stabilize the financial system, fears of a worldwide recession remained a major concern. Hungary raised interest rates significantly in order to protect its currency, the forint. Belarus has asked for financial assistance from the International Monetary Fund, while Ukraine's Prime Minister expects her country to receive substantial aid from the IMF soon. The IMF is also prepared to assist Pakistan and Iceland, both of which are facing financial challenges. According to Neil Dougall, chief economist for emerging markets at Dresdner Kleinwort, capital is now shifting back from emerging markets to developed markets. Optimism was dampened by the problems, but officials expressed some hopeful signs amid the financial crisis, with billions of dollars being allocated for rescue efforts globally. U.S. Treasury Undersecretary David McCormick acknowledged the challenging times ahead for the economy but suggested a potential recovery by late next year. Mervyn King, governor of the Bank of England, also indicated that the worst might be over for the financial system, based on discussions within the Group of Seven nations. He mentioned on Tuesday that we are still a long way from reaching stability, but he believes that the plan to strengthen our banking system, both domestically and internationally, will be viewed as a turning point in the recent banking crisis. This was supported by a decrease in U.S. dollar short-term funding costs in London and Asia, indicating that banks are starting to rebuild trust in each other. Russia, a rising economic force, has also shown signs of progress in bank lending, with interbank lending returning to normal. The rates may be decreasing, and banks are beginning to lend to sectors again, but it will still take two to three weeks for the situation to truly improve, according to First Deputy Prime Minister Igor Shuvalov as quoted by the Financial Times. Despite efforts to combat financial collapse, there is a looming fear of recession due to the worsening global economic climate. The Bank of England's recent meeting minutes indicated a significant deterioration in the UK economy, with Governor King suggesting it may be entering its first recession in 16 years. Financial markets were in turmoil as Wall Street was poised for a weak opening, with Dow Jones futures dropping by nearly 3 percent. European shares were down by more than 4.4 percent, while Japan's Nikkei average closed 6.8 percent lower. Emerging markets were also feeling the impact, with MSCI's sector index hitting its lowest level since June 2005 and sovereign debt spreads widening to over 700 basis points compared to Treasury yields - the first time since early 2003. Currencies, except for the forint, were also struggling, as the Turkish lira hit a more than two-year low and South Africa's rand reached its lowest level in over 6 years against the dollar. Sanjay Mathur, an economist at the Royal Bank of Scotland in Singapore, mentioned that there will likely be a significant downturn in the business cycle that needs to be addressed. Various US companies reported their quarterly results on Wednesday, providing insight into different industries and sectors within the world's largest economy. While tobacco companies Philip Morris International and Reynolds American Inc, as well as fast-food chain McDonald's Corp, exceeded analysts' expectations with their profits, they were exceptions in an otherwise bleak outlook.