Stocks cut their losses in the last 
half hour of trading on a day of wide swings.
The late, modest recovery gives some confidence after seven deep market dives and one modest drop that the recent interventions taken by the Treasury and the Federal Reserve may get a chance to work as fear and panic ease up a bit.
After this wild and frightening week, investors will be looking to a meeting on Saturday in
Washington of Treasury officials and finance ministers from the United
Sates Britain, Italy, Germany, France, Canada, and Japan.
The
Dow Jones industrial average, which fell more than 600 points earlier in the day, closed down just 128 points, or 1.5 percent. It traded in a range of more than 1,000 points today. The Standard & Poor's
500-stock index fell 1.2 percent. The technology-heavy Nasdaq composite index closed up 4.39 points The Chicago Board Options Exchange
Volatility Index, or the Vix, rose to another record.
"A
psychiatrist is what is needed to help investors today," Tony
Crescenzi, chief bond market strategist at Miller Tabak & Co., told MarketWatch.
Shares of Morgan Stanley plunged amid worries about its capital. Exxon Mobil slumped as oil prices continued to fall. General Motors, which plunged on Thursday on fears of bankruptcy, was higher. Shares of CBS and
Viacom tumbled after both companies issued profit warnings, citing slowing advertising spending as the economy weakens.
Oddly, while this is a banking crisis, shares of Bank of America and J.P. Morgan Chase, and Citigroup had solid gains.
For the week, the Dow was down 18 percent, the worst in its 112-year history. The S&P was also down 18 percent, its worst week since
1933.
Helping to fuel the sell-off in stocks appears to be liquidations by hedge funds that have come under pressure, particularly in credit default swaps.
Indeed one of the most watched events today was an auction of some $400 billion of credit default swaps on Lehman Brothers. The results were uglier than feared. While banks and other sellers were hoping to get 9 to 12 cents on the dollar, the price for the contracts came at 8.625, meaning that those who sold insurance on Lehman debt will have to pay out 91.375 percent of it to holders.
Washington and other governments are exploring a number of options, including temporarily insuring all deposits, as Germany and Ireland have done, backing loans among banks, and pumping cash into banks by buying preferred or common shares.
This morning, President Bush vowed that the United States would come up with a solution. The U.S.
government, “has a wide range of tools at our disposal,” he said, noting that the $700 billion bailout package gives the Treasury the power to buy or insure troubled assets and to buy stakes in financial institutions.
from Portfolio.com: News and Markets
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