The Dow Jones industrials finished nearly 370 points lower for the session, dropping below the 10,000 mark for the first time in four years as markets around the world spiraled downward in the face of a banking crisis that has tightened its grip on the global economy.
But the outcome could have been worse. Two hours before the close, the Dow was on track for an ignominious record - 800 points lower in a single session, worse than the 777-point drop a week ago.
The sell-off came despite the $700 billion U.S. government bailout package, which was signed into law Friday after two weeks in which traders had appeared to count on the rescue as their only hope to avoid a market meltdown.
The average is down almost 30 percent from its all-time high of 14,164.53, set a year ago Thursday, but that wasn't bad news for everyone.
"The people who sold today [Monday] made a mistake," said Mark Skousen, a Brigham Young University graduate, financial writer and economist who edits the monthly Forecasts & Strategies newsletter. "They panicked only to see the market recover."
Speculation among traders late in the session that the market's pullback had been severe enough to force the Federal Reserve into taking other steps to soothe the markets helped stocks rebound from their lows. The Fed increased a short-term loan program to as much as $900 billion and announced it would begin paying interest on reserves that banks keep with it.
The global plunge in stocks was under way well before Wall Street ever woke up. In Japan, the Nikkei average lost more than 4 percent. And then the losses spread across Europe - nearly 6 percent for the FTSE-100 in Britain, 7 percent for the German DAX and more than 9 percent for France's CAC-40.
In the United States, President Bush twice made unscheduled remarks on the economy, saying in Cincinnati that the economy would be ''just fine'' but that the bailout package needed time to work.
In Utah, financial planners were soothing investors anxious about their investments in equities.
Mark Lund, of South Jordan, said Monday's wild swings, on top of the gyrations of recent weeks, stress the need for a diversified portfolio of stocks, bonds and fairly liquid investments (i.e. money markets and CDs).
Lund, who is 36, said all of his retirement is in stocks because of his longtime investment horizon.
Although he wasn't worried about Monday's events, plenty of others were. The market is reacting to troubles that started with an overheated housing market in the U.S. that has gone on to infect financial markets around the world, making banks fearful of lending to other banks, let alone to businesses and consumers. That has led to worries that economies around the world might not only sputter but slide into reverse.
The crush of selling Monday came exactly one week after the Dow lost 777 points, its biggest closing loss in terms of points. The swings in the Dow on Monday also marked the beginning of a fourth week of tumult in the markets. Triple-digit Dow swings have been commonplace since mid-September, when investment house Lehman Brothers went bankrupt and the government stepped in to bail out insurer American International Group.
Related developments
* The yield on the three-month Treasury bill fell to 0.49 percent from 0.50 percent. Investors were willing to accept low returns to have their money in a secure place. The yield on the 10-year note fell to 3.45 percent from 3.60 percent.
* Bank of America Corp. reported its third-quarter results earlier than planned, revealing a 68 percent profit drop, and plans to boost capital by selling $10 billion in stock and halving its dividend.
* The Treasury Department moved to implement the financial rescue package, naming a former Goldman Sachs exec to oversee spending the $700 billion earmarked for the plan and pledging to work with other countries to calm global markets.
* Wachovia, Citigroup and Wells Fargo, in consultation with the Federal Reserve, have agreed to a standstill of all formal litigation activity over Wells' deal to acquire Wachovia, disrupting an earlier agreement with Citi.
* European governments issued a cascade of deposit guarantees to shore up their banks but fell short of any coordinated action to deal with the crisis sweeping financial markets, even as stock markets plummeted and the euro sank.
