Calm gave way to fear in financial markets Thursday, turning a relatively steady day into a rout that pushed the Dow Jones industrials below 9,000 for the first time in five years.

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Investors, who had begun the day somewhat optimistic that the government was taking extraordinary steps to contain the financial crisis, turned gloomy under an onslaught of worries about the economy and corporations.

On the anniversary of its closing high, the Dow shed more than 7 percent, or almost 700 points, to 8579.19. The Dow has lost 5,585 points, or 39 percent, since closing at 14,198 a year ago. The S&P 500, which also fell more than 7 percent to 909.92, is off 655 points, or 42 percent, since recording its high of 1,565.15 a year ago.

Shares of General Motors Corp., one of the 30 stocks that make up the Dow, tumbled 28 percent to their lowest since 1950.

Credit also remained clogged. The London Interbank Offered Rate -- a key benchmark for the loans banks make to each other so that they can lend to businesses and people -- rose, signaling that banks remain hesitant to extend credit out of fear they won't be paid back.

Wall Street had begun the day higher on news that the Bush administration is considering taking part ownership in a number of U.S. banks.

The aim of such a move would be to thaw the lending freeze that threatens to push the world's economy into recession. It comes after rampant fear about the global economy sent investors scurrying on Tuesday for safety in U.S. government securities despite an orchestrated round of rate cuts by the world's central banks.

The markets looked set to extend their six day rout another day, though, as they grappled with worries that tight lending would throw the global economy into a recession.

Meanwhile, the White House is trying to assure anxious Americans that the United States is working aggressively to stabilize the nation's financial system despite the continuing plunge in the stock market.

President George W. Bush will make a statement on the economy Friday in the Rose Garden.

White House press secretary Dana Perino said the Treasury Department is moving quickly to use new tools to improve liquidity, which is the root cause of the problem. She said that "Americans should be confident that every effort is being taken to stabilize our markets."

Also, in an effort to show that governments around the world were focusing intently on ways to resolve the crisis, the administration announced that Bush would meet with finance officials from the Group of Seven major industrial countries at the White House on Saturday.

Perino said it will give Bush an opportunity to hear directly from those ministers about how the financial crisis is affecting their economies and the steps they are taking to deal with it.

Perino said the president will stress "the importance of nations working in a coordinated way to address the crisis."

The finance ministers are in Washington for the annual meetings of the International Monetary Fund and the World Bank.

A Bush administration official said one thing being considered as the $700 billion financial rescue is put into action is the government taking part ownership of certain banks.

The official said the rescue package passed by Congress last week allows the Treasury to inject financial institutions with fresh capital in exchange for ownership shares.

The approach has the support of lawmakers such as Sen. Charles Schumer. The New York Democrat has argued that it would be an effective way of bolstering bank balance sheets and prompt them to resume lending, while also giving taxpayers the benefit of an equity stake in the bank.

Fed Reserve Cuts Rates

The Federal Reserve on Wednesday cut its target for the benchmark rate on overnight loans between banks to 1.5 percent. The cut from 2 percent took the rate to its lowest level in more than four years.

In an unprecedented coordinated move, central banks in England, China, Canada, Sweden and Switzerland and the European Central Bank also cut rates after a series of high-stakes phone calls over several days between Fed Chairman Ben Bernanke and his counterparts.

For millions of Americans, the Fed's cut means borrowing money becomes cheaper. Home equity loans, credit cards and other floating-rate loans all fluctuate depending on what the Fed does.

Bank of America, Wells Fargo and other banks cut their prime rate by half a point to 4.5 percent, also the lowest in more than four years, after the Fed announced its decision early Wednesday.

Fed watchers believe the central bank might cut rates further when it meets later this month, and perhaps again in December, in hopes of cushioning the blow if the United States falls into recession.