Associated Press
Tuesday, October 28, 2008

NEW YORK, Oct. 27 -- Wall Street ended another highly volatile session with a big last-minute loss as the market's stubborn worries about a protracted economic downturn and tight credit erased budding optimism about a housing recovery.

The Dow fell 203.18, or 2.42 percent, to 8175.77 after earlier rising by as many as 220 points. Even before the late-day sell-off, it was an incredibly volatile day for Wall Street -- the Dow crossed between positive and negative territory 60 times during the session.

The Standard & Poor's 500-stock index fell 27.85, or 3.18 percent, to 848.92, and the Nasdaq composite index fell 46.13, or 2.97 percent, to 1505.90.

The back-and-forth moves were typical for a turbulent market that has seen many recent rallies evaporate -- particularly as hedge and mutual funds sell off even strong assets so they can meet investors' demands for their money back. These forced sell-offs tend to happen late in the day, when the funds figure out how much cash they'll need to meet redemptions.

But the market's anxiety also increases as the closing bell approaches, especially with growing concern about the spread of the financial crisis overseas. News from Asia and Europe tends to break overnight and before trading on Wall Street resumes in the morning.

"We were trading higher earlier on very light volume, but the buyers just couldn't gather enough momentum to keep it going," said Alfred E. Goldman, chief market strategist at Wachovia Securities. "When confidence is razor-thin, the nervous tension goes way up, and bam -- the sellers take over."

The malaise grew particularly after Moody's Investors Service in the last half-hour of trading Monday downgraded General Motors further into "junk" status, pointing to the sharp contraction of the U.S. auto market. Earlier, banks got a boost after the Treasury said it signed agreements to buy stock in nine financial institutions this week. An upbeat home sales report also gave the market support until late afternoon.

Light, sweet crude oil fell 93 cents to settle at $63.22 per barrel.

General Motor s sank 50 cents, to $5.45.

American International Group fell 35 cents, to $1.35.