After the Dow dropped 200 points within minutes of the start of trading, the session was volatile, with stocks recovering much of their early losses, then declining anew.

Prices of Treasury bonds jumped as investors fled to the safety of government paper.

Asked at a news conference this morning whether he thought the turmoil in the subprime lending market could put a chill on credit in the broader economy, President Bush said he did not think that the federal government needs to step in to provide more money to the financial markets. “The fundamentals of our economy are strong,” he said.

“Another factor one has got to look at is the amount of liquidity in the system,” he added. “In other words, is there enough liquidity to enable markets to be able to correct? And I am told there is enough liquidity in the system to enable markets to correct.”

Image Louis Spina worked his post on the trading floor of the New York Stock Exchange, where the Dow fell 387 points today. Credit... David Karp/Associated Press

The latest upheaval on Wall Street came after a sell-off in Europe, which was prompted after BNP, the largest publicly traded bank in France, became the latest European lender to announce problems linked to the worsening credit market in the United States, where several large companies have already announced losses. Late last month, a group of German government-backed banks agreed to bail out a bank, IKB Deutsche Industriebank, whose investments in American mortgage securities have fallen significantly in value.