Even before the opening bell, Monday looked ugly.

But by the time that bell sounded again on the New York Stock Exchange, seven and a half frantic hours later, $1.2 trillion had vanished from the U.S. stock market.

What had started 24 hours earlier, with a modest sell-off in stock markets in Asia, had turned into Wall Street's blackest day since the 1987 crash. The broad market plunged almost 9 percent, its third-biggest decline since World War II. The Dow Jones industrial average tumbled nearly 778 points, or almost 7 percent, its biggest single-day points fall ever, easily beating the 684 points it lost on the first day of trading after the Sept. 11, 2001, terrorist attacks. By the end of the day, the broader stock indicators also plummeted. The Standard & Poor's 500 index declined 106.62, or nearly 9 percent, its largest-ever point drop and its biggest percentage loss since the week after the October 1987 crash.

The Nasdaq composite index fell 199.61, more than 9 percent, its third-worst percentage decline. The Russell 2000 index of smaller companies fell 47.07, or 6.7 percent.

As uncertainty gripped investors earlier Monday, the credit markets, which provide the day-to-day lending that powers business in the United States, froze up even further.

As lawmakers began to vote on a $700 billion rescue for financial institutions, the trading desk at Voyageur Asset Management in Chicago went silent. Money managers gaped at a television screen carrying news that seemed unthinkable: The bill was not going to pass. Shortly after 12:30 p.m. (MDT), the rescue was rejected.

''You just felt like the world was unraveling," Ryan Larson, the firm's senior equity trader, said. ''People started to sell and they sold hard. It didn't matter what you had - you sold."

Frustration, and then panic, coursed through the markets. Investors feared the decision in Washington would imperil the financial industry, as well as the broader economy.

The response triggered a historic selloff - including a terrifying decline of nearly 500 points in mere minutes as the vote took place, the closest thing to hysteria the stock market has seen in years.

At the Federal Reserve and other central banks, policymakers were also anxious. Even before the vote on Capitol Hill, central bankers tried to jump-start the credit markets by offering hundreds of billions of dollars in loans to banks around the world. But neither the stock nor the credit markets appeared to respond. Just 24 hours earlier, few imagined Monday would play out this way.

On Sunday afternoon, the secretary of the Treasury, Henry Paulson, and the speaker of the House, Nancy Pelosi, announced that they had agreed on the terms of a bailout.

But while congressional aides and lawmakers worked on the details, the credit crisis that began more than a year ago in the American mortgage market was setting off new alarms in Europe.

Shortly before 4 p.m. (MDT), Belgium, the Netherlands and Luxembourg agreed to invest $16.2 billion to rescue a big bank, Fortis. A few hours later, the German government and a group of banks pledged $43 billion to save Hypo Real Estate, a commercial property lender. Well after midnight, news came that the British Treasury had seized the lender Bradford & Bingley and sold the bulk of it to a Spanish bank.

In Tokyo, where stocks had opened higher in early trading on Monday, worries quickly set in. Traders returned from lunch to reports suggesting the financial crisis was taking a toll on the global economy. Markets across Asia began to sell off. As the drama unfolded in Asia, a major American bank was in trouble.