But then at 3:39 p.m., as Treasury Secretary Henry Paulson gave an update on the economy and the $700 billion government bailout, stocks again went negative. And then they just kept falling.
The wild ride on Wall Street led one anchor on financial news network CNBC to say: "It's like the weather in Denver, if you don't like it, just wait."
David R. Kotok, co-founder and chief investment officer of Cumberland Advisors, said that Wall Street has yet to hit the climax of the selling frenzy. The market has been close but fallen short several times because the government steps in before a bottom can be reached.
"Each time, the trigger for the reversal was an intervention. Therefore you didn't have a clean climax in which the last investor capitulates and throws in the towel in the ring," Kotok said. "And here again, we didn't get it this morning."
Kotok said he believes "we are in a bottoming process" but just haven't hit the actual bottom yet.
"I thought we might see it today … but we have this issue of response to an intervention," he said. "True terror doesn't get saved by a Federal intervention and that's the missing link. And it may be that we have exhausted the sellers without having the true terror. That remains to be seen."
Kenneth S. Rogoff, an economics professor at Harvard University and a former economist at both the International Monetary Fund and the Federal Reserve, called the cut "a positive development."
"But the panic is so overwhelming at this point, that they really need to fire on all fronts," Rogoff said, adding that the 0.5 percent, or 50-basis-point, cut, "should have been more aggressive."
"They think 50 basis points is aggressive. But in this environment it's not," Rogoff said. "It should have been 100."