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U.S. Shares Sink Despite Late Rally

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Global Markets Fuel Concern Over Economy

Global stock markets continue to fall as Japan's main stock index plummeted nearly 10 percent Friday. European indexes followed suit, with main exchanges down from 7.5 percent in London to nearly 10 percent in Germany and France. In the U.S., President Bush made a statment on the crisis in the credit markets that has caused widespread sell-offs on Wall Street.

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"Over the last five years, we've been in kind of an inflationary trend in terms of commodities, and a lot of that was dependent on the dollar" being weak against other currencies, said Thomas Hartmann, a broker and analyst at Altavest Worldwide Trading.

"Now we're seeing a reversal of that, and a lot of air coming out of these markets," he said. "Couple that with fear of a slower economy, and it's a double whammy for these markets."

An exception to the commodities rout was gold. Until recently, gold often moved in the opposite direction of the U.S. dollar as investors piled into one or the other. But gold futures moved up with the dollar Monday, rising 4 percent, to $866.20 an ounce.

"That's the flight to quality," Hartmann said. "There's a sector of people that want something tangible, and gold is truly an asset, whereas currencies -- the euro, the dollar -- it's paper, and some people have trouble being comfortable with that now."

The yield on two-year Treasury notes fell to 1.43 percent from 1.58 percent Friday as investors accepted lower returns to park their money in safe havens.

Trading strategists said they would continue to look for cues from the Federal Reserve, which is facing strengthening calls for an interest rate cut, and the Treasury Department, which is starting to implement its $700 billion plan to take weakened assets of the books of financial companies.

"Monetary authorities are throwing a lot of ammunition at this and attempting to get something to catch and hold," said Bob Doll, vice chairman and chief investment officer for global equities at BlackRock. "They will throw more at it if that's what it takes."

Staff writer Renae Merle contributed to this report.

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