For most of the day the Standard & Poor's 500 was off 6%- 7% or more at times; the Dow and Nasdaq were down by similar amounts.
But a late rebound in the last half hour of trading cut the losses to a more 'tolerable' 3.6% for the Dow and the S&P 500 and 4.3% for Nasdaq.
The Dow fell short of the 10,000 point level at the close after falling to a four year low during the day when it was down well over 700 points. The index finished at 9955 points. It took over an hour to sort out the closing levels for the market, such was the confusion.
Shares fell across the board with those of industrial and financial giant, GE down to an 11 year low.
It was a day that saw near panic selling at times in Europe and the US. Distressed selling by liquidating hedge funds was observed. Some hedge funds reported losses of 40%-60% for September alone!
Europe's Dow Jones Stoxx 600 Index had its steepest decline since 1987, down 7.6%. All 18 European markets covered fell in a day of dramatic trading where losses ranged as high as 19% in Russia.
The London market was off more than 7.8%, the biggest drop in 21 years while Paris' CAC Index fell 9%, the largest ever. Germany's Dax was off more than 8%, thanks to the fears generated by the struggle to keep Hypo Real Estate alive.
Futures trading had our market off 233 points at the opening this morning, or more than 5%, but that recovered to a 4% loss or 178 points on Wall Street's late bounce.
Oil finished under $US88 a barrel, at $US87.81 in New York. Copper fell almost 9% to $US2.45 a pound (which is bad news for the likes of BHP Billiton), grains tumbled by 5% or more. Only gold rose, up $US25 an ounce in early Asian trading to $US859 an ounce.
The Fed moved to boost liquidity in markets, especially in the US. It's looking to improve liquidity in the important commercial paper market. It will add up to $US900 billion in loans.
Emerging markets fell the most ever and exchanges in Brazil and Russia were forced to halt trading as the global banking crisis escalated in Europe.
Iceland suspended trading in banks and financial stocks and guaranteed bank deposits, joining Denmark, Ireland, Germany, Italy and Greece in doing so.
Brazil's Bovespa index tumbled 13%, while Russia's Micex Index plunged 19% after trading was halted three times. China's benchmark CSI 300 Index slid 5.1%. Indonesia and Saudi Arabia lost the most in at least six years. Trading was halted in brazil to let the market stabilise.
The MSCI Emerging Markets Index slumped 11%, the biggest loss since 1987. It's down 47% so far
Australian shares hit a three year low yesterday in another day of miserable trading and in Tokyo, Japanese shares hit a four year low point.
Tokyo, had its lowest close since July, 2005.
The US rose to a 13 month high against the euro, thanks to the worsening financial situation in Europe where authorities are struggling to contain a crisis. Germany and Denmark joined Ireland, Greece and Italy in guaranteeing bank deposits, especially from individuals.
In early afternoon trade, the ASX200 index was down as much as 178.6 points, or 3.8%, to 4516.8. The slide took the index below the 4,600-point level touched during last month's market panic after the failure of US investment bank, Lehman Brothers.
At the close the index was down for the seventh of the past eight days, losing 155 points, or 3.3%, to 4540.4; the lowest close since November 9, 2005.
Japanese share prices slid 3.6% in morning trade hitting that four-year low on worries about the financial crisis. They ended down 4.5%.
All markets open for trading in Asia declined, with benchmark stock indexes in South Korea, Taiwan and Australia falling more than 3%. China was off 5.1%. The Hong Kong market hit a two year low yesterday.
Driving the gloom was the worsening of the financial crisis in Europe with the bailout of Hypo Real Estate in Germany rising to 50 billion euros, all of which will come from the Government and the banking industry.
Hypo's part in raising 15 billion euros in asset sales was not mentioned in the new package which was forced on the government after Hypo's financial position worsened and the first 365 billion euro deal collapsed.
Fortis's first rescue fell over and then being done separately in two big deals with the Dutch Government buying one bit for 16 billion euros and the BNP Paribas of France buying 75% of the rest for 11 billion or so euros.
In Italy UniCredit, Italy's second biggest bank held a Sunday board meeting and agreed to raise more than 6.6 billion in euros of fresh capital with over half that coming from abandoning cash dividends to shareholders and paying them in shares, as UBS of Switzerland is doing.
The Aussie dollar fell one US cent yesterday morning in local trading as financial markets worried about the events in Europe and the prospect of a bigger than usual 0.50% interest rate cut today from the Reserve Bank.
That took the loss on the currency since its high of 98.49 in mid-July to 23%.
It then fell further in late Asian and European trading as the fears grew about the health of European banks.
The Australian dollar's slump accelerated during the day. It finished at just over 78 US cents in Sydney on Friday of last week; it hit a low of 69.70 US cents. It fell around 6% yesterday alone before the late recovery, of sorts.
It has lost 14% of its value over the past week alone as the US dollar has soared on demand from nervous investors looking for a safe home. That has kicked commodity prices lower, led by oil, gold and copper, which in turn has fed through into downward pressure on local share prices and of course the Aussie dollar.
BHP Billiton fell 63 cents, or 2.1%, to $29.79 - the lowest close in 17 months. Its takeover target, Rio Tinto slumped $4.43, or 5%, to $84.48. The bid (3.4 BHP shares for every Rio share) was worth $101.28, 16.5% under the bid value.
BHP shares were lower in London last night, as were Rio and all other commodity groups.
Fortescue Metals lost 56 cents, or 11%, to $4.41. The shares have shed nearly two-thirds of their value in the past three-and-a-half months.
Westfield slumped nearly 6% or more than $1 to $17 on news of rising vacancies in US shopping centres.
According to a report from the US, vacancies at US neighborhood and community shopping centres reached a 14-year high in the third quarter, rising to 8.4%, while at regional and supermalls, the vacancy rate rose to 6.6% last quarter from 6.3% in the second quarter, the highest since the fourth quarter of 2001, when it was 6.8%. Vacancies were up from 5.5% a year earlier.
Among the banks, the ANZ fell 63 cents, or 3.5%, to $18.05, the Commonwealth, $1.01, or 2.2%, to $44.00, the NAB, 60 cents, or 2.3%, to $25.55 and Westpac 71 cents, or 3.1%, to $22.50.
Investment bank, Macquarie Group lost $4.10 or 10%, to $35.00.
