The Standard & Poor's 500 index also fell more than 7 percent.

The drops came on the one-year anniversary of the closing highs of the Dow and the S&P. The Dow has lost 5,585 points, or 39.4 percent, since closing at 14,164.53 on Oct. 9, 2007. The S&P 500 is off 655 points, or 41.9 percent, since its high of 1,565.15.

U.S. stock market paper losses totaled $872 billion yesterday, and the value of shares overall has tumbled a stunning $8.33 trillion since last year's high. That is based on preliminary figures from the Dow Jones Wilshire 5000 Composite Index. It tracks 5,000 U.S. companies' stocks and represents almost all stocks traded in America.

The bad news in this country colored trading in Asia: Japan's Nikkei index fell, and South Korean share prices plunged 8 percent in early trading.

Wall Street had awakened yesterday to news that the federal government was considering seeking an equity stake in major U.S. banks in order to stabilize them. That would be yet another startling intervention by the government in the free market, but economists said President Bush was left with little choice because of the credit markets.

Britain rolled out a similar plan, though no British bank has received any investments. In Iceland, the government now has control of the country's three major banks as it struggles to contain the troubles there.

Wall Street has been teetering on the brink of panic for a month now. Yesterday's sell-off was triggered when Standard & Poor's Ratings Services put GM and its finance affiliate GMAC L.L.C. under review to see if its rating should be cut. GM has been struggling with weak car sales in North America.

The action means there is a 50 percent chance that S&P will lower GM's and GMAC's ratings in the next three months.

S&P also put Ford Motor Co. on credit watch negative. The ratings agency said that GM and Ford had adequate liquidity now, but that that could change in 2009.

GM led the Dow lower, falling $2.15, or 31.11 percent, to close at $4.76, while Ford fell 58 cents, or 21.80 percent, to close at $2.08.

"The story is getting to be like that movie Groundhog Day," said Arthur Hogan, chief market analyst at Jefferies & Co. Inc. He pointed to the still-frozen credit markets, and LIBOR, the bank-to-bank lending rate that remains high despite interest-rate cuts this week by the Federal Reserve and other central banks.

"Until that starts coming down, you'll be hard-pressed to find anyone getting excited about stocks," Hogan said.

The Dow finished down 678.91, or 7.33 percent, at 8,579.19. The blue chips had not closed below the 9,000 level since June 30, 2003. The S&P 500 fell 75.02, or 7.62 percent, to 909.92, while the Nasdaq composite index fell 95.21, or 5.47 percent, to 1,645.12.

The Nasdaq, with a bevy of tech stocks, spent much of the session higher, but declined as the sell-off intensified. Still, its losses were less severe because of the smaller drops in names such as Intel Corp. and Microsoft Corp.

The Russell 2000 index of smaller companies fell 47.37, or 8.67 percent, to 499.20.

To calm the crisis, Bush will make a statement on the economy today in the Rose Garden. He is not expected to announce any new policy decisions, White House press secretary Dana Perino said.

"He will assure the American people that they should be confident that economic officials are aggressively taking every action to stabilize our financial system," Perino said.

The sluggishness in the credit markets that triggered much of the heavy selling in markets around the world since mid-September appeared little changed yesterday after days of efforts by the Federal Reserve and other central banks to resuscitate lending.

The central banks this week lowered key interest rates to help unclog the credit markets and promote lending. While a rate cut can take up to a year to work through the economy, the move was aimed as a boost to investor sentiment.

Wall Street is also looking for effects of short selling now that a three-week ban imposed by regulators has expired. Short selling is a bet that a stock's price will fall.

The tech sector saw less selling than other sectors after International Business Machines Corp. affirmed its forecast. IBM fell $1.55, or 1.71 percent, to close at $89.00. Intel fell 65 cents, or 4.00 percent, to close at $15.60. Microsoft fell 71 cents, or 3.09 percent, to close at $22.30.

Energy names were among the biggest decliners as the price of oil fell. Exxon Mobil Corp. fell $9.00, or 11.69 percent, to close at $68.00, while Chevron Corp. fell $9.10, or 12.45 percent, to close at $64.00.

Light, sweet crude fell $1.81 to settle at $86.62 a barrel on the New York Mercantile Exchange, the lowest closing price since October last year.