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TheStreet Open House

The Beating Continues on Wall Street

Updated from 12:35 p.m. EDT

Stocks on Wall Street recovered from the worst of a massive early selloff Friday, but the major indices remained deep in the red as credit crisis-induced fears continued to weigh on investor sentiment.

Trading was exceedingly choppy. The Dow Jones Industrial Average plummeted nearly 696 points early and briefly broke below the 8000 level, only to recover just as sharply and briefly touch positive territory. Lately, however, the index was trading down 479 points at 8100. The S&P 500 was lately down 55 points at 855. The Nasdaq was 82 points lower at 1563.

Amid the increasing concern about banks, the U.S. government was considering guaranteeing bank debt and insuring all domestic bank deposits, according to a report in The Wall Street Journal.

The report precedes a meeting of the Group of Seven industrial nations. The economic powers plan to discuss a coordinated response to the global credit crisis. Japan's finance minister, Shoichi Nakagawa, said that his country would propose an international fund to secure emergency loans for nations suffering under the credit squeeze.

"Because this is a global banking crisis, you've got to come up with a global plan to backstop everyone," said Paul Mendelsohn, chief investment strategist at Windham Financial. "This is a real financial panic. The run on the money markets is the equivalent of a run on the bank."

He said the Treasury should begin guaranteeing money market funds and is right to take equity positions in financial firms as opposed to buying bad debt.

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