Fed Holds Rate at 2%

In addition, the Fed also conducted its usual Tuesday morning $20 billion, 28-day single-tranche repo, bringing the total amount of repos to $70 million.

Earlier, the European Central Bank injected 70 billion euros, or nearly $100 billion, in one-day funds into European money markets, more than doubling the 30-billion-euro injection the ECB announced Monday. Additionally, the Bank of England, the Bank of Japan and the Swiss National Bank all delivered extra funds to markets.

The U.S. equities market spent most of the morning mired in red. "This is smacking of desperation, which is why the markets aren't reacting very well," says Paul Nolte, director of investments with Hinsdale Associates. "When you're levered up, it takes a hell of a lot of money to get unlevered and make it worth anything. Now we're not just adding our liquidity, we're asking banks from around the world to add their liquidity."

These drastic capital-infusion moves by the world's central banks follow the worst day for U.S. equities in years. On Monday, the Dow Jones Industrial Average dropped a staggering 504.48 points, or 4.4%, to 10917.51, its worst single-day point drop since the market reopened six days after the terrorist attacks of Sept. 11, 2001.