NEW YORK — NEW YORK — Wall Street joined in a worldwide cascade of despair Monday about the financial crisis, driving the Dow Jones industrials to their biggest loss ever during a trading day — in what local economists are saying is a global economic problem not matched since the Great Depression.

Even a big afternoon rally failed to keep the Dow from its first close below 10,000 since 2004.

The sell-off came despite the $700 billion U.S. government bailout package, which was signed into law Friday after two weeks in which traders had appeared to count on the rescue as their only hope to avoid a market meltdown.

At its worst point, the Dow was down more than 800 points, an intraday record. The stock market rallied during the final 90 minutes of the trading day, and the Dow finished down about 370 points at 9,955.50.

“This is the worst financial crisis since the Great Depression,” said Clemson University economics professor Raymond Sauer. “We had the dot-com meltdown and the crash of 1987. But this is more serious, because it’s systemic. We had to tear up the financial model that we have been working with for the last decade and tighten up the ship.”

Speculation among traders late in the session that the market's pullback had been severe enough to force the Federal Reserve into taking other steps to soothe the markets helped stocks rebound from their lows of the session.

“If you can't say that we're oversold now I don't know what you say. You're at least due for a bounce if nothing else,” said Bill Stone, chief investment strategist for PNC Wealth Management.

Howard Bodenhorn, also a professor of economics at Clemson University, said the Federal Reserve has pumped $900 billion into the nation’s banking system so banks have money to lend to customers — especially for small-business loans.

That could help, Bodenhorn said, but it could still take six months to nine months to see any relief.

“I am not sure its going to get better any time soon. Federal Reserve pumped almost $900 billion into the banking industry, and it’s still frozen up,” Bodenhorn said. “The concern is going to be for small business, and consumer loans. The next concern is in the credit card market.”

Anthony Sabino, a professor of law and business at St. John's University in New York, however, did not make the analogy between this financial crisis and the Great Depression.

The market “is displaying one of its worst traits with a herd mentality, and investors have an appetite for feeding on fear,” Sabino said.

“Most certainly, this is not the Great Depression of the 1930s, but (is like) the savings and loan crisis of the 1980s — and we bailed them out,” he said. “Once people catch their breath, they'll see this is the proper analogy, and this will breathe life back into banking institutions.”

The global plunge in stocks was under way well before Wall Street ever woke up. In Japan, the Nikkei average lost more than 4 percent. And then the losses spread across Europe — nearly 6 percent for the FTSE-100 in Britain, 7 percent for the German DAX and more than 9 percent for France's CAC-40.

President Bush twice made unscheduled remarks on the economy, saying in Cincinnati that the economy would be “just fine” but that the bailout package needed time to work.

The troubles that started with an overheated housing market in the U.S. have infected financial markets around the world, making banks fearful of lending to other banks, let alone to businesses and consumers. That has led to worries that economies around the world might not only sputter but slide into reverse.

William Hauk, an assistant professor of economics at the University of South Carolina's Moore School of Business, said it is important for investors not to panic after hearing the news about the stock market. Sometimes the stock market will rise and fall, he said.

Like the economics professors at Clemson, he said the fact thatthe Dow Jones Industrial fell below 10,000 for the first time since 2004 is significant.

"It confirmed to me that this crisis is a very serious one," Hauk said. "It is probably going to take some big steps to fix."

He also does not see any hope for economic recovery until the summer of 2009, he said. The recovery may require international coordination, which includes European governments coming up with bailout plans for their banks, Hauk said.

Sauer said he feels it will take some work. The passage of the bailout plan in Congress was the first step and should have been passed faster than it did, he said.

“I think a lot of depends on the policy response from Washington,” Sauer said. “The key is not to overburden the taxpayer and the businesses with regulatory intervention. We don’t want to bail out people but we do want to save the system. It is not pleasant to do. But sometimes you’ve got to clean up a mess, whether you are responsible for that mess or not.”

David Plaisted, an Edward Jones financial advisor working in Toccoa, Ga., said, "We have to look at our long-term goals as opposed to short-term events. Even though capitalism might not be perfect, we feel it's the best system in the world. It's just difficult to predict cycles, and that's why we have to be prepared for them. I think those that hold on through this downturn will be rewarded significantly in the future.”

According to Plaisted, while staying the course might be right for long-term investors, there's no right answer as to what short-term investors should do.

“If their goals are short-term, then perhaps they need to look at some safer investments,” Plaisted said. “A lot depends on an individual's tolerance to risk.”

The crush of selling Monday came exactly one week after the Dow lost 778 points, its biggest closing loss in terms of points. On that day, the House voted down an earlier bailout package that had appeared to be a safe bet to pass.

The swings in the Dow on Monday also marked the beginning a fourth week of tumult in the markets. Triple-digit Dow swings have been commonplace since mid-September, when investment house Lehman Brothers went bankrupt and the government stepped in to bail out insurer American International Group.

But even with the bailout package firmly in place — a plan under which the federal government will buy bad mortgage-related assets off the books of banks — investors remain worried that banks are too fearful to lend and are cutting off air to the economy.

Over the weekend, governments across Europe rushed to prop up failing banks, while the governments of Germany, Ireland and Greece also said they would guarantee bank deposits. U.S. investors appeared worried the bailout would not be enough to jump-start the economy. Even other steps, including a Federal Reserve decision to expand a loan program to squeezed banks, didn't help much.

The sharp one-day tumbles over the last two Mondays don't come close to the drops that became black marks on the timeline of Wall Street history. Black Monday, in October 1987, and stock drops that preceded the Great Depression were more than 20 percent. Monday's drop, by comparisons, was less than 8 percent at its worst.

For the day, the Dow lost 3.6 percent. The selling was broad: Little more than 200 stocks finished the day higher on the New York Stock Exchange, while about 3,000 finished lower.

At its lowest point Monday, the Dow was down 800.06, at 9,525.32. The benchmark average dipped below 10,000 for the first time since Oct. 29, 2004, and closed there despite the afternoon rally.

As an indication of how fearful investors still are, government-backed debt was in high demand. The yield on the three-month Treasury bill, which moves in the opposite direction as its price, fell to 0.43 percent from late Friday at 0.50 percent. Investors are willing to accept low returns to have their money in a secure place.

Broader indexes also plunged. The Standard & Poor's 500 index shed 42.34, or 3.85 percent, to 1,056.89; and the Nasdaq composite index fell 84.43, or 4.34 percent, to 1,862.96. The Russell 2000 index of smaller companies dropped 23.49, or 3.79 percent, to 595.91.