Updated from 9:43 a.m. EST

Succumbing to the volatility that has lately plagued the market, stocks on Wall Street were dropping from earlier highs Tuesday, after the

Federal Reserve

announced a $600 billion program to aid government-backed mortgage firms and a $200 billion program to aid consumers hurt by the credit crisis.

The

Dow Jones Industrial Average

was down 23 points to 8421, and the

S&P 500

was shedding 4.3 points to 848. The

Nasdaq

slipped 27 points to 1445.

The major averages had earlier enjoyed an opening rally, following the Fed's announcement that it would buy direct obligations and

mortgage-backed securities

tied to the Federal Home Loan Banks and

Fannie Mae

(FNM)

,

Freddie Mac

(FRE)

and

Ginnie Mae

.

The Fed also announced the creation of a $200 billion facility for holders of triple-A rated asset-backed securities tied to loans related to education, autos, credit cards and small businesses.

Speaking at a press conference about the Fed programs and the $700 billion Troubled Asset Relief Program, Treasury Secretary Henry Paulson said that stabilization of the mortgage-backed securities market and stimulation of consumer-lending markets are crucial. He said that Americans need to continue to be able to finance everyday purchases and stressed that no single piece of legislation was likely to resolve the credit crisis.

Bill Stone, chief investment strategist for PNC Wealth Management, said that intervention into the asset-backed commercial paper markets is a continuation of efforts to unfreeze credit markets. By facilitating the securitization of asset-backed bonds, the government is encouraging additional lending, which helps consumers finance purchases, he said. When credit markets are too tight, said Stone, "Even if the deals are good, it doesn't make any difference. Not many of us can pay in cash."

Stone said that the Fed's intervention is bullish for the markets, as it helps stocks price in a time frame for the length of a recession. "The longer the credit crunch goes on, the longer we have to assume the recession goes on," he said.

As the day's trading got underway, several financial firms were looking to get government help of a different sort.

Goldman Sachs

(GS) - Get Report

garnered strong interest in a government-backed issuance of $2 billion to $3 billion in bonds, according to a report by

The Wall Street Journal

. The sale is expected to conclude Tuesday, and Citi and

General Electric

(GE) - Get Report

are expected to stage similar government-assisted bond sales.

In earnings news, computer systems maker and Dow component

Hewlett-Packard

(HPQ) - Get Report

delivered earnings that beat estimates on the top line but saw profit decline slightly year over year.

Mining concern

BHP Billiton

(BHP) - Get Report

dropped a hostile takeover bid for

Rio Tinto

(RTP)

on a sharp decline in commodity prices and tough credit conditions.

The day's economic data, however, was less than rosy. The Bureau of Economic Analysis revised its read of the third-quarter decline in GDP to 0.5% from 0.3%.

Separately, the Conference Board's November

consumer confidence index

gave a reading of 44.9, up from 38 in October and ahead of economists' forecasts.

The Standard & Poor's Case Shiller home price index, meanwhile, showed a third-quarter decline of 16.6% year over year, the worst decline on record.

In Europe, the

Organization for Economic Cooperation and Development

said that the developed world may face the worst recession it has seen since the early 1980s.

Moving on to commodities, crude oil was losing $2.75 to $51.75 a barrel. Gold was down 10 cents to $820.30 an ounce.

Longer-dated U.S. Treasury securities were rising in price. The 10-year was up 1-26/32, yielding 3.11%. The 30-year was gaining 3-4/32 to yield 3.62%. The dollar was falling vs. its major foreign competitors.

Overseas, European exchanges, such as the FTSE in London and the Dax in Frankfurt, were edging higher. Asian markets, including Japan's Nikkei and Hong Kong's Hang Seng, finished on the upside.