The hair-trigger mentality of the market was evident from the opening bell. The Dow fell nearly 700 points in the first 15 minutes, recovered to an advance of more than 100 before the first hour was over, then turned sharply lower again. Investors were nervously awaiting the last hour of trading, which has tended to see the heaviest selling over the past week of tremendous losses.

Frozen credit markets and a loss of confidence in the world's financial system have caused the Dow to drop 21 percent in just 10 trading days. The blue chip index tumbled 678 points Thursday, and is heading to its worst weekly point and percentage drop since being created 112 years ago.

The major indexes had sharp swings throughout the day, likely exacerbated by the computer-driven "buy" and "sell" orders that kicked in when prices fell far enough to make some stocks look like attractive bets or make other investors want to exit the market. The spurts of buying didn't reflect an easing of the market's despair, and so the heavy selling continued.

"Fear has been running rampant all over the Street. Fear and greed, that's what rules the Street. I think the carcass has been stripped to the bone," said Dave Henderson, a floor trader on the New York Stock Exchange for Raven Securities Corp.

Many investors have waited until the final hour of trading each day this week to hit the "sell" button, so investors appeared uneasy about how the market would look at 4 p.m., when the closing bell sounds. The selling can intensify as mutual funds and hedge funds are forced to raise cash to meet investors' "sell" orders and as nervous investors otherwise shy from placing bets in such a jittery market. In addition, Fridays are particularly troublesome as so much news that affects the markets — from bankruptcies to bailouts — has arrived in recent weekends.

At the start of Friday's session, losses for the year totaled a staggering $8.3 trillion, as measured by the Dow Jones Wilshire 5000 Composite Index, which tracks 5,000 U.S.-based companies representing nearly all stocks traded in the U.S.

In the final hour of trading, the Dow fell 135.80, or 1.58 percent, to 8,443.39. At its low point Friday, the Dow was down 696 at 7,882.51, just 60 points above its low in Wall Street's last bear market, 7,286.27, reached Oct. 9, 2002.

Broader stock indicators also fell. The Standard & Poor's 500 index declined 22.16, or 2.44 percent, to 887.76, while the Nasdaq composite index fell 27.42, or 1.67 percent, 1,617.70.

The Dow, which began the session down 16.9 percent since Monday, was on track for its worst weekly decline ever. Previously, the worst performance came in the week ended July 21, 1933, when the blue chips fell 16 percent.

Through Thursday, the Dow lost 2,271 points, suffering its worst seven-day point drop. Its percentage decline of 20.9 percent over that stretch is the largest since the seven-day plunge ending Oct. 26, 1987, when the Dow lost 23.8 percent. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall 22.6 percent in a single day.

By comparison, during the first week of trading after the Sept. 11, 2001, terror attacks, the Dow lost 1,369.70, or 14.26 percent. But during the eight trading days following the attack, the decline came to 1,038.12, or 10.8 percent, as buyers returned to the market.

The Dow and S&P 500 reached their all-time highs a year ago, on Oct. 9, 2007. Through Thursday, the Dow has lost 5,585 points, or 39.4 percent, since closing at its record of 14,164.53, while the S&P 500, meanwhile, is off 655 points, or 41.9 percent, since recording its high of 1,565.15.

On Friday, about 300 stocks advanced while about 2,900 declined on the New York Stock Exchange, where volume came to a heavy 1.69 billion shares.

Investors continue to shift money into safer investments, most of it going into the government bond market. The yield on the three-month Treasury bill plunged to 0.24 percent from 0.58 percent late Thursday. That suggests that demand for T-bills, regarded by investors as the safest assets around, remains high.

Longer-term Treasury yields moved higher as investors moved into shorter term issues. The yield on the benchmark 10-year note rose to 3.87 percent from 3.76 percent late Thursday.

Gold prices fell $40.60 to $844.90 an ounce on the New York Mercantile Exchange, while oil prices fell declined sharply. A barrel of light, sweet crude fell $8.53 to $78.06 per barrel on the Nymex.

Jack Ablin, chief investment officer at Harris Private Bank, said some investors are fearful of placing bets before the market shakes out for fear they will exacerbate their losses.

"You don't want to get hit by a train," he said. "This is now about market psychology. There's extreme fear and panic out there."

President Bush said Friday the government's efforts to rescue the financial sector was powerful enough to succeed but that it would take some time to be fully implemented.

His remarks came as finance ministers and central bankers from the Group of Seven nations gathered Friday in Washington to discuss the economic meltdown. One of the potential remedies expected to be reviewed at the meeting is for governments to guarantee lending among banks.

Most major central banks around the world slashed interest rates this week after continuing problems in the credit market triggered concerns that banks will run out of money. Analysts have described the mood on trading floors this week as panicked at times, with investors bailing out of investments on fears there is no end in sight to the financial carnage.

A stream of selling forced exchanges in Austria, Russia and Indonesia to suspend trading, and those that remained opened were hammered. The rout in Australian markets caused traders there to call it "Black Friday."

European stocks sank Friday, with Britain's FTSE-100 falling 8.85 percent, German's DAX declining 7.01 percent, and France's CAC-40 ending down 7.73 percent. In Asia, the collapse of Japan's Yamato Life Insurance caused already nervous investors to pull even more money out of the market — the Nikkei 225 fell 9.6 percent.

An index considered to be Wall Street's fear gauge reached record highs on Friday in another sign of massive investor anxiety. The Chicago Board Options Exchange Volatility Index, known as the VIX, rose to an all-time intraday high of 74.46 on Friday. The VIX, which usually trades under 50, tracks options activity for members of the S&P 500.

Still, prospects of further government help and, perhaps, attractive prices helped parts of the financial sector show signs of life. Big national banks were among the gainers, including Bank of America Corp., which rose 28 cents to $19.91. Some smaller banks also rose, including Fifth Third Bank Corp., which rose 31 cents, or 3.2 percent, to $10.04.

Not all financials were enjoying a bounce, however. Morgan Stanley Inc. fell $5.05, or 41 percent, to $7.40 as investors worried that even with a major investment from Japan's Mitsubishi UFJ Financial Group. Meanwhile, Goldman Sachs Group Inc. fell $18.01, or 18 percent, to $83.34.

Citigroup Inc. said late Thursday it was suspending its bid to acquire Wachovia Corp., which will be acquired by Wells Fargo & Co. Citigroup rose 42 cents, or 3.3 percent, to $13.35, while Wells Fargo fell 70 cents, or 2.6 percent, to $26.55. Wachovia surged $1.03, or 29 percent, to $4.63.

Financials were most prominent among the smattering of stocks that rose in the S&P 500, but no other sectors trended upward — other gainers included Tiffany and Co. and eBay Inc. Tiffany rose 25 cents to $24.92, while eBay advanced 22 cents to $16.18.

Investors appeared unfazed by final results arriving in afternoon trading from an auction Friday that set the price of debt issued by now bankrupt Lehman Brothers Holdings Inc. at 8.625 cents on the dollar, down from a preliminary estimate of 9.75 cents.

The auction was for credit default swaps, which are contracts used to insure against the default of financial instruments like bonds and corporate debt. Traded in a $60 trillion, unregulated market, many of the instruments have fallen sharply because of their ties to bad mortgage debt. Those big losses and nervousness about who holds what CDS has made financial institutions hesitant to lend to one another. The auction could help the market determine which companies are most at risk from CDS losses.

The Russell 2000 index of smaller companies fell 24.60, or 4.93 percent, to 474.60.

AP Business Writers Joe Bel Bruno and Dan Strumpf in New York contributed to this report.