Armed officers were sent to Cobden Street in Palfrey along with firefighters and ambulances at around 1pm.
19 firefighters were sent and put out a blaze which had spread to two cars and a property.
Videos posted on social media showed flames leaping from two cars which had reportedly been deliberately set on fire.
WATCH footage of the fire:
Video: Your Walsall
Thick black smoke was pouring into the sky from the vehicles as the flames spread to a nearby building.
Meanwhile police armed with semi-automatic weapons were sent along with paramedics from West Midlands Ambulance Service.#
A West Midlands Fire Service spokesman said: "We can confirm that four crews attended just after 1pm today. Two fire engines from Walsall, one from West Brom and one from Willenhall were sent.
One resident spoke of their shock, but said the area suffers crime. They said they were told gunshots had been heard. Another said they had heard someone had been shot. But that has not been confirmed.— Jamie Brassington (@JamieB_Star) May 4, 2021
"The fire that involved two cars and a property was extinguished quickly by crews at the scene."
A spokesman for West Midlands Ambulance Service later confirmed that paramedics were called to "reports of a road traffic collision and a car and house fire".
"On arrival we discovered a total of four patients," he said.
"A man, who was treated for gunshot injuries, and a woman who was treated for injuries sustained in the road traffic collision were both taken to hospital with serious but non life-threatening injuries.
"Two other patients, a man and a child, were assessed for the effects of the smoke inhalation and discharged at the scene."
West Midlands Police set up multiple cordons along the road as an investigation got underway into the incident.
Officers were seen knocking doors, and forensic teams dressed in white overalls were also seen probing the incident.
The shell of a burnout car was located within the cordon, with its paint completely stripped.
One man, who wished to remain anonymous, said: "I'm not really shocked [to see the road taped off]. We heard someone got shot. This happens quite often around here."
In a statement West Midlands Police said a 4x4 crashed into a stationary black VW Golf at the junction with King Street, leaving one occupant and a female pedestrian injured.
Moments later shots were fired from another vehicle before the occupants of the 4x4 set fire to their vehicle and made off. The blaze spread to the VW Golf and to a nearby house.
Detective Inspector Chris Fox, from West Midlands Police's CID, described the events as "confusing".
"Violence like this on our streets is not acceptable. I understand it’s a shocking and disturbing incident, but I do believe the people in the cars were targeting each other."
Anyone with information can contact West Midlands Police via live chat on the force's website or call 101, quoting log 2022 of May 4.