Dow Falls 370, But Rallies From 800-Point Intra-Day Slide

The Dow fell 370 points today, to below the key 10,000 level, but rallied back in the final hours of trading from a 800 point deficit. This is the first time the average has closed below the 10,000 mark since 2004. Selling pressure was not only felt in the U.S. but resonated across the globe as the credit crisis intensifies, which most fear could lead to a major global economic slowdown.

The euro fell the most against the yen since its debut after the German government and state banks were forced to pledge $68 billion to rescue Hypo Real Estate Holding AG. Europe's Dow Jones Stoxx 600 Index fell over 7%, its largest intraday decline since 1987. Brazil's stock market was halted twice after dropping more than 10%. Russian markets were also halted.

Due to fears of slowing demand, Crude fell below $88 per barrel today.

Investors seeking safety pushed the yield on the two-year Treasury to 1.5%, 50 basis points below the Fed Funds rate. In addition, despite strength in the U.S. dollar versus, Gold rose 3% to $860.

Traders believe much of the selling pressure comes from forced selling from hedge fund and mutual fund redemptions. Many popular hedge fund posted terrible results in September. While some hedge funds may face redemptions, others might be closed entirely.

The 3,031 declining issues versus the 250 advancing issues on the NYSE today illustrates the level of selling pressure.

In a move to boost liquidity, the Federal Reserve doubled its auctions of cash to banks to as much as $900 billion. There is also growing talk the Fed will have to lower the Fed funds rate by as much as 1% over the short term.

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