NEW YORK — After a breathtaking plunge that took the Dow Jones industrial average down 800 points — its biggest drop ever during a trading day — ending with a loss of 370 didn’t seem so bad.
Wall Street managed a big afternoon rally Monday in yet another day of extreme volatility and worldwide worries about the financial crisis and stubborn credit, even after the $700 billion U.S. bailout.
Still, the Dow finished below 10,000 for the first time since 2004 and lost more than 3 1/2 percent for the day, and there were no signs fear and unpredictability were leaving the stock market any time soon.
The Dow’s low came just before the last hour of trading, and the decline was an ominous sign for investors who worried the market would tip even lower in the final stretch of the day. Late-day sell-offs are seen as a sign of fleeting confidence.
At its worst point, the Dow was down 800.06, an intraday record.
The stock market rallied during the final 90 minutes of the trading day, and the Dow finished down about 370 points at 9,955.50.
The average is down almost 30 percent from its all-time high of 14,164.53, set a year ago Thursday.
Speculation among traders that Wall Street’s pullback had been severe enough to force the Federal Reserve into taking other steps to soothe the markets helped stocks rebound from their lows.
“If you can’t say that we’re oversold now I don’t know what you say. You’re at least due for a bounce if nothing else,” said Bill Stone, chief investment strategist for PNC Wealth Management.
The day’s decline came despite the $700 billion U.S. government bailout package, which was signed into law Friday after two weeks in which traders had appeared to count on the rescue as their only hope to avoid a market meltdown.
The crush of selling Monday came exactly one week after the Dow lost 778 points, its biggest closing loss in terms of points. On that day, the House voted down an earlier bailout package that had appeared to be a safe bet to pass.
The swings in the Dow on Monday also marked the beginning a fourth week of tumult in the markets. Triple-digit Dow swings have been commonplace since mid-September, when investment house Lehman Brothers went bankrupt and the government stepped in to bail out insurer American International Group.
The sharp one-day tumbles over the last two Mondays don’t come close to the drops that became black marks on the timeline of Wall Street history. Black Monday, in October 1987, and stock drops that preceded the Great Depression were more than 20 percent. Monday’s drop, by comparisons, was less than 8 percent at its worst.
