Updated from 12:44 p.m. EDT

Stocks in New York experienced jumbled trading Thursday, as tight credit markets and pessimism about the financial sector accompanied new developments for the Treasury Department's $700 billion bailout package.

The Dow Jones Industrial Average, earlier up as much as 190 points, was recently down 139 points at 9119. It was one year ago today that the Dow closed at an all-time record high of 14,164. The S&P 500 was losing 16 points to 969. The Nasdaq was falling 6.5 points at 1734.

On Wednesday, markets sold off even after the Federal Reserve, along with central banks in Europe and Canada, orchestrated a coordinated cut in interest rates to help free up the credit markets.

As Thursday's session got underway, credit markets continued to tighten despite the rate cuts. Three-month Libor, a measure of the rate banks charge one another for large loans, was up 43 basis points to 4.75%. Overnight Libor was up 1.16 percentage points to 5.09%.

Commercial paper wasn't faring much better. The Fed reported that the market for company debt declined by $56.4 billion to $1.55 trillion for the week ended Oct. 8. Paper issued by financial institutions was down $42.4 billion to $641 billion, the Fed said.

In an effort to further prop up the financial system, the Treasury was considering buying equity stakes in U.S. banks to try to bolster their capital levels, according to media reports. Financial firms have been crippled by their exposure to illiquid mortgage-backed securities, and the Treasury's previous plan, known as the Troubled Asset Relief Program, was designed to buy those assets from banks in exchange for fresh capital.

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