The Dow celebrated the one-year anniversary of its all-time high by closing below the 9000 threshold for the first time since June 2003 and ending in the red for the seventh straight day. 

The worst financial crisis since the Great Depression continues to engulf Wall Street, carving out 5,500 points from the index since last October, including 2,200 points over the past seven days alone.

Today's Market

The Dow Jones Industrial fell 678.91 points or 7.33%, to 8579.19, the broad S&P 500 dropped 75.02 points, or 7.62%, to 909.92 and the Nasdaq Composite lost 95.21 points, or 5.47%, to 1645.12. The consumer-friendly FOX 50 dropped 54.54 points, or 7.37%, to 685.16.

“Having an eight-handle on the Dow is a scary picture but it's just representative of what we’ve seen over the last 10 trading days. It's pretty scary business," said Art Hogan, chief market strategist at Jefferies & Co. “It’s just unheard of. We’re getting to that point where it's impossible not to think we’re hitting a bottom." 

Thursday's plunge came despite an absence of any major negative developments. Instead, the markets focused on the continued uncertainty of the credit crisis and fears the global economy will slide into a recession. 

As has been the case for much of the past week, the markets fell off a cliff at the end of the day, with the Dow tumbling 500 points in the final hour. 

“I think we’re in the middle of what is panicked selling," Scott Wren, senior equities strategist at Wachovia, told FOX Business. “I don’t know if we’re at the moment of maximum pessimism, but I think we’re pretty close.”

Fear on Wall Street was most obvious in the VIX, a gauge of market volatility, which soared to a record high closing level above 63.

The markets failed to rally around a pair of positive pieces of news: IBM's (IBM) better-than-expected quarterly results and reports of another financial rescue from the Treasury Department.  

“The one thing about these kinds of declines is they don’t last long. We will get to some panicky type of low and have a sharp rebound and start to build a base, which will take quite a bit of time,” said Phillip Roth, chief technical market analyst at Miller Tabak.

General Motors (GM) was easily the biggest loser on the Dow, losing more than one-quarter of its value and falling to levels unseen in nearly 60 years. The index's other percentage losers include ExxonMobil (XOM), Chevron (CVX) and aluminum giant Alcoa (AA) Click here to read the story

Financial Turmoil Continues

Despite unprecedented intervention from the government, financial stocks remain under enormous pressure. The sector lost 10% of its value on Thursday and blue-chip banks Citigroup (C), Bank of America (BAC) and American Express (AXP) all closed with even sharper losses.

The bleeding stock market and continued freeze in the credit markets has the Treasury Department considering yet another emergency plan for the financial markets. 

The Treasury is mulling ways to inject capital directly into struggling institutions, possibly in exchange for equity, The Wall Street Journal reported. No such moves are imminent but the option has begun to be actively considered for the first time, the newspaper reported. 

Treasury Secretary Henry Paulson played up these new liquidity injection authorities in a press conference on Wednesday, though his comments went largely unnoticed. The new plan being considered would likely be voluntary for banks and could resemble one unveiled by the British government on Wednesday, The New York Times reported. 

Thursday's news didn't stop the selling as Morgan Stanley (MS), Prudential (PRU) and CIT Group (CIT) all closed about 20% lower. 

In the past month alone, the government has intervened countless times in an attempt to rescue the financial markets from a disaster. Aside from seizing control of Fannie Mae (FNM) and Freddie Mac (FRE), the government gave an emergency loan to AIG (AIG) and even orchestrated a global interest rate cut on Wednesday.

Nothing, though, has stopped the bleeding on Wall Street. 

"Everything the Fed and Treasury are doing is right but unfortunately it's going to take a while to make sure the credit markets are working," said Hogan. 

Energy Stocks Plummet

Once the darlings of the bear market, energy stocks crumbled again on Thursday as crude oil prices declined to the lowest levels of 2008.

ExxonMobil (XOM) and Chevron (CVX) led the energy selloff, plummeting double-digit percentages to 52-week lows. Names like Hess (HES) and XTO Energy (XTO) plunged even further. 

Oil closed down $1.81 to $86.62 a barrel. Oil prices have fallen off a cliff since hitting $147 a barrel in July, diving 40% to turn negative on the year. 

The commodity has been hammered by the stronger greenback and fears a global recession will slash demand for energy. The plummeting oil prices have prompted a number of OPEC nations to call for an emergency meeting. 

Retailers only fueled recession fears on Thursday, with Gap (GPS), Abercrombie & Fitch (ANF) and TJX (TJX) disclosing same-store sales declines in September. The results come a day after weaker-than-expected results from Wal-Mart (WMT), Costco (COST) and Target (TGT).

Meanwhile, Wall Street shrugged off rare positive corporate news. IBM (IBM) beat the Street late Wednesday with $2.05 per share in earnings. While IBM backed its full-year guidance, the tech giant's revenue of $25.3 billion came up shy of estimates. 

Thursday also marked the end of the controversial short-sale ban on nearly 1,000 financial stocks. The Securities and Exchange Commission implemented the rule on Sept. 18 in an effort to restore order to the tumultuous market. Some have argued the ban added to the confusion in the markets as investors looking to buy financial stocks had fewer ways to leverage their bets.

Corporate Movers

General Motors (GM) lost almost one-third of its market cap amid ongoing concerns about the impact of a recession and the credit crisis. J.D. Power and Associates warned of a "collapse" in global auto market sales and S&P warned it may cut GM's credit ratings, citing conditions that "will remain a serious challenge for the foreseeable future." GM told Dow Jones Newswires it remains focused on its plans to raise $15 billion through cost-cutting and asset sales. 

Citigroup (C) and Wells Fargo (WFC) have been unable to reach a settlement in their effort to carve up Wachovia (WB) as the two banks have been surprised by the amount of low-quality assets stuck on Wachovia’s books, The Wall Street Journal reported. Both banks have also been spooked by the lukewarm response to Bank of America’s (BAC) $10 billion stock sale, the newspaper reported.

American International Group (AIG), the insurance giant the government gave an emergency $85 billion loan to last month, will get up to an additional $37.8 billion of fresh liquidity from the Fed. Under the plan, AIG will lend the Fed billions of dollars worth of securities to replenish its liquidity. Click here to read more about AIG's second loan

Prudential (PRU) pre-announced its third-quarter results amid a double-digit plunge in its shares, saying it sees an adjusted-profit of 67 cents to 90 cents per share. The insurer said it plans to suspend all purchases of common stock and that it has enough liquidity to meet requirements. 

Abercrombie & Fitch (ANF) warned its second-half earnings will likely miss its earlier forecast, sending its shares diving to 52-week lows. A&F now sees a third-quarter profit of 74 cents to 76 cents per share, below analysts’ view of $1.12. The teen apparel retailer's September same-store sales slumped 14%.

Walgreen (WAG) is walking away from its unsolicited $75-a-share offer to acquire Longs Drug Stores (LDG), making the deal another victim of the credit crisis. Walgreen cited Longs' "repeated refusal" of the deal and the "substantial deterioration in the national economic outlook." Longs had previously agreed to be acquired by CVS Caremark (CVS) for $71.50 a share. 

MetLife (MET) and Hartford Financial Services (HIG) recently held merger talks that didn't lead anywhere, The Wall Street Journal reported. Both insurers have seen their shares plummet over the past week after reporting third-quarter losses and capital raises. MetLife, which announced thousands of job cuts on Wednesday, also said it priced its sale of 75 million shares at $26.50 a share.

Data Dump

The Labor Department said weekly jobless claims fell by 20,000 last week to 478,000 -- the 12th consecutive week of claims above the crucial 400,000 level. The report was in line with what economists surveyed by Dow Jones Newswires forecasted. Click here to read more about jobless claims

Continuous claims, which are for individuals out of work for more than a month, jumped by 56,000 to 3.7 million -- the highest level since June 2003. 

The Commerce Department said U.S. wholesale inventories rose by a larger-than-expected 0.8% in August. The higher inventories could indicate excess demand due to weaker sales during that period.

Global Markets

European markets gave up early gains to close with sharp declines once again. 

The Dow Jones Euro Stoxx 50 closed down 65.51 points, or 2.43%, to 2629.04. London's FTSE 100 fell 42.89 points, or 1.21%, to 44313.80. 

Asian markets also improved as Hong Kong's Hang Seng jumped 511.51 points, or 3.31%, to 15943.25. Japan's Nikkei 225 didn't post a rebound from its record plunge but closed with more modest losses of 45.83 points, or 0.50%, to 9157.49.