Updated from 10:30 a.m. EDTStocks 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 463 points, or 5.4%, at 8117. The S&P 500 staged a similar comeback, though it was lately down 53 points, or 5.9%, at 857. The Nasdaq was 72 points lower, or 4.4%, at 1573. Financial stocks, at the forefront of investor skepticism thanks to nearly dry credit markets, experienced mixed trading in the highly volatile session. Battered financial firms Morgan Stanley ( MS) and Goldman Sachs ( GS) were again in focus. Ratings agency Moody's said it may cut Morgan Stanley's credit rating, and lowered its credit outlook for Goldman to negative. Following a heated battle with Citigroup ( C), Wells Fargo ( WFC) appeared set to buy Wachovia ( WB) unencumbered. Citigroup said it will continue to pursue $60 billion in damages for breach of contract but would not try to overturn a merger between Wells Fargo and Wachovia. Citi had announced a Wachovia acquisition on Sept. 29, only to trumped days later by a new bid from Wells. The Journal also reported that insurance firm AIG ( AIG) took out an additional $9 billion in government loans, bringing its total borrowing from the U.S. in the past three weeks to $70.3 billion. The company continues to attempt to sell its assets in a struggle to stay afloat. Bank of America ( BAC) shares were edging higher following reports that it may sell a portion of its 11% stake in China Construction Bank. The banking titan also appeared set to carry out its acquisition of Merrill Lynch, despite declines in both firms' stock prices, according to a report in the Financial Times.