Stocks Swing Wildly After Global Rate Cuts

On Tuesday, stocks fell hard as credit markets remained tight after an unprecedented Federal Reserve decision to begin buying commercial paper from U.S. businesses.

Pavlik said that Tuesday's selloff was encouraging, and the market may be primed for a short-term bounce. He said that although some companies may offer better-than-expected third-quarter earnings, "The picture is very cloudy for many companies. That's what may temper any bounce going forward." However, he did predict that the S&P 500 will end above 1000 for the year, somewhere between 1100 or 1200.

What's most important, said Paulsen, is that policymakers and leaders show confidence in the economy. "Maybe it's time to tell the market that, 'Look, we've done enough. We think there's plenty of liquidity. There's plenty of juice ... . You guys figure this out.'" Paulsen said the market is priced for the worst-case scenario and not the actual current state of the economy. "If we could come down and come back just on confidence, that would do wonders," he said.

Before the internationally coordinated rate cuts, conditions were looking dire Wednesday. As evidence of a worldwide slowdown piled up, European governments struggled to put together their own rescue plans. The U.K. government set up an $87 billion rescue package for U.K. banks.

Stateside, investors faced the final day of trading with the Securities and Exchange Commission's temporary ban on short-selling of more than 900 financial stocks.

As for company news, The Wall Street Journal reported Citigroup(C Quote) is looking for partners in its buyout of Wachovia(WB Quote). Citi and Wells Fargo(WFC Quote) had earlier agreed to cease their buyout battle for Wachovia until noon Wednesday. Following the expiration of that deadline, Citi and Wells agreed to prolong their truce until Friday morning.