Traders David O'Day, center, and Steve Schnibbe, right, work on the floor of the New York Stock Exchange 9 Oct. 2008

Most of the selling came late in the day during a session that saw considerable volatility. The Dow Jones Industrials closed at their lowest level since August 2003. The closely-watched average has now fallen 37 percent, or more than 5,000 points from its all-time high exactly one year ago.

"We don't want fear to drive the markets. And we're getting to that point where sentiment is a very key factor," said David Gertz, a trader at High Mark Funds.

Scott Nations at the Chicago Mercantile Exchange says markets are disappointed that it will be several weeks before the government is able to use the $700 billion set aside for buying up distressed assets. "The $700 billion intervention may be exactly the right move. But if it takes 45 days for that money to get into the system, then we're really stuck for those 45 days," he said.

Both Nations and Gertz spoke on Bloomberg Television.

It was the seventh consecutive daily loss on the New York Stock Exchange. Oil was steady at $86 a barrel and gold was down $20 to $886 an ounce.

On Friday finance ministers from the seven richest industrial nations hold a previously scheduled meeting at the U.S. Treasury. That gathering is taking on added urgency as the credit crisis that began in the United States 14 months ago has spread to Europe and around the world. World Bank President Robert Zoellick, who will attend portions of the meeting, says finance officials will be discussing ways to unfreeze the markets so that normal lending can resume.

"What you saw with some of these financial institutions, even if they had a good capital based, they didn't have the liquidity to be able to respond promptly to people wanting to take money out of the system," he said.

U.S. Treasury Secretary Henry Paulson also plans to convene a special meeting on Saturday of finance ministers and central bank chiefs from 20 industrial and developing countries.