Separately, the U.S. and other industrial powers pledged to take "decisive action and use all available tools" to prevent a worldwide economic catastrophe.

"This is a period like none of us has ever seen before," declared Paulson at a rare Friday night news conference. He said the government program to purchase stock in private U.S. financial firms will be open to a broad array of institutions, including banks, in an effort to help them raise desperately needed money.

The administration received the authority to take such direct action in the $700 billion economic rescue bill that Congress passed and President Bush signed last week.

At the White House earlier, Bush said, "We're in this together and we'll come through this together." He added, "Anxiety can feed anxiety, and that can make it hard to see all that's being done to solve the problem."

Still, Friday's widely mixed finish was proof that Wall Street remains deeply troubled, and trading was likely to remain volatile when the market reopens on Monday.

Bond markets and banks will be closed Monday for the Columbus Day holiday.

"This kind of volatility tells you that there are huge disagreements among investors about what the fundamentals are, about what the outlook is," said Ethan Harris, managing director and chief U.S. economist at Barclays PLC.

The hair-trigger mentality of the market — a reflection of the intense anxiety on the Street — was evident from the opening bell. The Dow fell 696 points in the first 15 minutes, recovered to a gain of more than 100 before that first hour was over and then turned sharply lower again. It spent much of the session down between 300 points and 500 points, regaining some ground and then falling again — until the last hour, when the average had swings spanning hundreds of points that took the Dow up as much as 322.

"The deeper problem is not the stock market drop but the freezing up of the credit markets, and that's the root problem, and they (G7 central banks) have to keep applying the antifreeze until it works," Harris said.

The major indexes' sharp swings Friday were 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.

"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.

The Dow rebounded from a low of 7,882.51 for the day — the worst trading level since March 17, 2003. Still, its close was the lowest since April 25, 2003.