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U.S. stocks plummeted in morning trading today as investors began to fear that a bailout of the financial sector would not be enough to prevent a global recession and Europe continued to grapple with a stabilization of its banking sector.

The Dow Jones industrial average lost as much 584 points today, falling below 10,000 for the first time since October 2004 before recovering some ground. It is trading off more than 5 percent, or 527 points just before 1 p.m. The technology-heavy Nasdaq fell more than 6 percent, or 120 points, and broader Standard & Poor's 500 stock index fell 5.7 percent, or 62 points.

Investors are being led by fear, analysts said. The $700 billion financial bailout plan enacted by the federal government last week has yet to loosen the credit markets and banks remain reluctant to lend to each other. The price of gold has skyrocketed as investors seek a safe haven. Oil fell below $90 a barrel today for the first time in months. Overseas, banks are increasingly facing problems of their own.

The day started with a negative momentum that has turned into a global panic, said Art Hogan, chief market analyst at Jefferies & Company. "It is just a realization that the global economy is going to be stagnate for the next 12 to 16 months" even with the rescue plan, Hogan said.

European officials are scrambling to bolster financial firms and Asian investors have grown worried that a global recession will undercut their export-dependent economies. In Europe, which has been forced to prop up several banks in recent weeks, some officials have begun to wonder whether the region needed its own comprehensive rescue package.

European governments have moved to convince depositors and investors that the banking system was safe. Germany, Denmark, Sweden and Austria expanded guarantees for private bank accounts, while other steps were taken to help ailing companies.

Overseas markets were down significantly today. London's FTSE 100 and Germany's DAX 30 closed down 7.9 percent and 7 percent, respectively, while Paris's CAC 40 lost 9 percent of its value. The Nikkei closed down 4 percent.

"There is a great amount of concern around the world about the global financial system," White House spokesman Scott M. Stanzel told reporters while Bush attended a GOP fundraiser hosted by a San Antonio realtor. "The president thinks the plan that was approved by Congress last week and that he signed into law is the right one to deal with the specific problem of getting the credit market moving again."

The price of oil fell as low as $88.89 a barrel in morning trading today, off its peak of $147 a barrel in July. The price of gold jumped $35 an ounce as investors sought a safe haven from the market turmoil.

"People realize that the [bailout] is not going to prevent a more serious economic downturn in the United States, including a couple of quarters of negative economic growth," said Marc Chandler, head of currency trading at Brown Brothers Harriman & Co. "The banking crisis spreading to Europe is another negative. It means the crisis is getting bigger."

Wall Street now expects the Federal Reserve to cut interest rates again, perhaps before its next scheduled meeting. "Credit markets have not responded to the appearance of a government bailout. The distress in the credit markets continue and in some cases has intensified," said Joseph Brusuelas, chief U.S. economist at California-based Merk Investments.

The Federal Reserve announced steps this morning to begin paying interest on the reserves that banks must keep with it -- a step meant to encourage banks to keep more funds on hand with the Fed, and in turn give the Fed more leeway in putting cash back into the banking system. At the same time, the Fed said that over the next two months it would double, to $900 billion, the short-term loans it would make available to financial institutions.

Today, Citigroup filed a $60 billion lawsuit against Wells Fargo and Wachovia with the Supreme Court of the State of New York, charging that Wachovia violated an agreement with Citigroup when it agreed to be acquired by Wells Fargo, and that Wells Fargo knowingly interfered with that agreement.

On Friday, Wachovia agreed to bought by Wells Fargo, spurning a previous deal with Citigroup. The Federal Reserve has stepped in to try to broker a deal. One possibility that has emerged is that Wachovia could be split between Citigroup and Wells Fargo to avoid a prolonged fight.

The acquisition of Wachovia continues the reshuffling of the financial sector, which already includes the bankruptcy of Lehman Brothers and acquisitions of Merrill Lynch and Washington Mutual. Competition for Wachovia's assets has cheered some investors, showing that the bank retains value despite being weighed down with risky mortgage loans.

Wells Fargo was down 2 percent in noon-time trading, while Citigroup fell about 8 percent.

In corporate news, Countrywide has agreed to set aside $8.4 billion to modify the loans of troubled borrowers under a settlement agreement with Iowa and other states. Countrywide was acquired by Bank of America earlier this year. Bank of America was down 6 percent in afternoon trading.

In other corporate news, facing increasing competition from other online retailers and waning enthusiasm, eBay said today it will cut about 1,000 jobs, or 10 percent, of its workforce. The company's shares were down 7 percent in morning trading.