On Wednesday U.S. stocks staged another ditch turnaround to end mostly lower sending the Dow Jones  back below the 9,000 level during the end trading session after surging 889 points, the second biggest-point jump a day earlier.

The Federal Reserve cut its federal funds target rate as expected lowering its key overnight lending rate to 1% from 1.5%, bringing the fed funds rate to its lowest level since 2004. The Fed said growth has slowed markedly and the extraordinary financial market stress could put the economy at greater risk.

Wednesday’s market was particularly volatile, although for a good part of the day it was unusually calm as investors waited for the Fed’s rate decision. In the final half hour, stocks staged another round of drama.

The Dow Jones Industrial Average rising 250 points only to erase the gains in the final minutes of trading. The Dow industrials shed 74.16 points to end at 8,990.96. The S&P 500 lost 10.42 points to 930.09, while the Nasdaq Composite gained 7.74 points to 1,657.21.

Stocks will likely remain volatile on Thursday as investors will be focusing on third quarter GDP and weekly jobless claims. Economists expect a decline of 0.5%. Is the U.S. going into a recession yet? GDP is also now likely to support the recession argument.

The definition of a recession is a decline in a country’s gross domestic product (GDP), or negative real economic growth, for two or more successive quarters of a year.

Third quarter real GDP will be near flat. Due to the gas prices, home prices, and higher unemployment, everyone feels its like a recession. This is in part because the stock market is down, and it is often taken as an indicator of the economy which didn’t lead to a recession in the first three quarters of 2008.

The outlook into 2009 is for a sluggish economy at best, but the specifics depend highly on how well the liquidity crisis on Wall Street is addressed. That remains highly uncertain.

“People are only mean when they’re threatened, and that’s what our culture does. That’s what our economy does” - Mitch Albom

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